The FTSE 100 rose by 180 points to close at 5,347, its second-biggest rise in points terms. Shares were helped by growing hopes that UK interest rates are likely to fall. The latest Merrill Lynch/Gallup survey of UK fund managers showed that 98 per cent expect the next rate move to be down.
The pound slipped over two pfennigs to DM2.8795 and half a cent to $1.6685.The moves announced by Hong Kong over the weekend to reinforce its dollar peg also helped. Asian markets made the biggest gains: Hong Kong's Hang Seng closed up 588.29 points at 8,076.76, a 7 per cent jump, and Tokyo's Nikkei jumped 747.15 points, more than 5 per cent, to end at 14,790.
European markets had a more mixed day, partly reflecting the reluctance of the Bundesbank president, Hans Tietmeyer, to follow Mr Greenspan's lead.
Events in Russia continue to weigh on emerging markets, but their impact on the markets of the developed world has subsided. The UK government has confirmed that it is hosting a meeting of senior finance and foreign ministry officials from the Group of Seven nations in London this weekend.
Not all the news was good. Fitch IBCA, the debt rating agency, said last night that it expected foreign banks to announce further losses in Russia. The agency reckons the total debt owed by Russia to the private sector is now more than $125bn and that $100bn of it will not be seen again, making it the biggest-ever loss suffered by private sector creditors.
Yesterday the Russian central bank governor, Sergei Dubinin, resigned as the rouble slumped another 10 per cent to 18.9 to the dollar, taking the fall since the crisis began to nearly 70 per cent. Prospects of a resolution seemed as distant as ever with the parliament again rejecting President Yeltsin's choice of Viktor Chernomyrdin as prime minister.Reuse content