Markets rally as banking fears ease

Global markets rallied today as fears over the health of European banks eased, but it was another volatile day marked by wild swings in share prices.

The FTSE 100 in London closed 156 points, or 3%, higher at 5163 as a strong opening for US shares turned sentiment around after the UK index had dropped below the 5,000 barrier early in the day.

Concerns over Europe's sovereign debt crisis and the exposure of French banks in particular had caused the early selling, but gains of more than 200 points for the Dow Jones Industrial Average when US markets opened sparked a rally.

News that French President Nicolas Sarkozy will meet German Chancellor Angela Merkel on Tuesday to discuss Europe's financial plight also helped the mood.

The CAC-40 index in Paris closed up 2.9%, while the DAX in Frankfurt gained more than 3%.

PA