Recovery hope as Footsie jumps 2%

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The Independent Online

London's benchmark share index soared to a new 13-month high today thanks to more evidence of a global economic recovery.

The FTSE 100 Index rose another 2 per cent as stocks leapt after better-than-expected results in the US and positive economic signs in the UK and overseas.

JP Morgan Chase kicked off the US bank sector third-quarter reporting season with a mammoth 581 per cent leap in profits to 3.6 billion US dollars (£2.3 billion) - news that helped the Dow Jones Industrial Average gain nearly 1 per cent in early trade.

UK unemployment figures showing the smallest rise in the number of people seeking jobseeker's allowance last month since May 2008 - up by 20,800 to 1.63 million - also fuelled recovery hopes on this side of the Atlantic.

The London market earlier received a boost after China confirmed its slump in exports eased in September, adding to optimism that global trade is improving.

Mining stocks were the biggest beneficiaries of the Chinese trade cheer, with Rio Tinto spurring on the rally by raising full-year production targets on the back of continued strong demand from Chinese steelmakers.

Oil prices likewise surged above 75 US dollars a barrel, helping UK oil majors BP and Royal Dutch Shell lift more than 2 per cent each.

Barclays was another Footsie firm making strong gains, up more than 5 per cent after the JP Morgan earnings result.

Strong investment banking returns helped JP Morgan book its quarterly profits haul, which overshadowed the group's caution over rising loan losses.

With Goldman Sachs set to follow tomorrow with an expected surge in earnings, investors piled into the sector.

Part-nationalised British groups Royal Bank of Scotland and Lloyds Banking Group joined Barclays on the list of top share risers, ahead 3 per cent and 4 per cent respectively.

But it was commodities stocks such as Cairn Energy, the oil and gas exploration company, and miner Kazakhmys that led the way on the leading share index, soaring by 10 per cent and 9 per cent each.

The share rises helped the FTSE 100 peak at 5261 as it recovered from yesterday's 1.1 per cent fall - a blip in the Footsie's rebound to pre-crisis levels, according to experts.

Philip Gillett, sales trader at IG Index, said: "Global markets are largely continuing their upward journey - even the UK's latest unemployment figures hint at a tentative recovery."

"For the rest of this week, the US earnings season will be watched closely for further pointers towards the strength of global economic recovery," he added.