£76bn boost as London's blue chip shares leap 8pc

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The Independent Online

London's leading shares index soared to the third biggest rise in its history today.

The FTSE 100 closed more than 8 per cent higher, soaring 316.2 points to 4242.5. Today's rally added around £76 billion to the value of battered UK blue chips.

Earlier, Japan's Nikkei 225 jumped nearly 8 per cent as traders speculated the country's central bank could also deliver rate cuts on Friday.

The rises came after Wall Street's Dow Jones Industrial Average rose almost 11 per cent amid expectations the US Federal Reserve will slash interest rates to 1 per cent later today in the latest attempt to tackle looming recession.

The US advance - the Dow's second biggest points gain ever - came despite dire economic data showing slumping consumer confidence in October.

The Dow had fallen 2,400 points in the previous eight sessions, also tempting bargain hunters into the fray.

ETX Capital broker Manoj Latwa said: "Bottoms are formed when the news is terrible. Not that I am calling a bottom here, but the stock market will turn around long before the economic news does."

The Bank of England is also expected to cut rates by at least 0.5 per cent at its own meeting next week, following the emergency rate-slashing move by central banks earlier in October.

In London, banks and insurers whose shares have been punished in the recent financial turmoil enjoyed strong recovery today on the economic stimulus hopes.

Royal Bank of Scotland and Halifax Bank of Scotland - which both require multi-billion Government bailouts - posted gains of almost 15 per cent.

Concerns over the capital buffers of many insurers have also hit the sector in recent days but the Footsie's leading riser was Old Mutual - up 25 per cent - followed by Norwich Union insurer Aviva, which soared 14%.

Oil prices rebounding off recent 17-month lows to reach 64 US dollars a barrel underpinned the Footsie's advance.

Heavyweight BP - which posted third-quarter profits of £6.4 billion yesterday - gained 5 per cent, while a host of other oil and gas-related stocks also rose.

Meanwhile the expectations of US rate cuts also gave the pound a lift against the dollar after a pummelling in recent days, which left sterling buying less than 1.53 dollars last Friday. The exchange rate was up at 1.60 dollars today.