An agreement to boost the eurozone bailout fund lifted London’s leading shares index today and helped it finish the first quarter of 2012 with gains of 3.5%.
The 17 nations will increase the fund to €800bn beyond its current ceiling of €500bn in a bid to stop the crisis escalating.
The FTSE 100 Index, which has suffered three days of declines, closed 26.4 points higher at 5768.5, as traders picked up banking and mining stocks which had been hit by the mid-week retreat.
That means London’s blue chip shares index has added nearly 200 points since the start of 2012 despite hefty falls in the mid-week amid fears about the strength of the recovery in the US and fresh gloom about the eurozone debt crisis.
The Dow Jones Industrial Average was up 0.4% – on course for its biggest ever first-quarter points gain in history – after sentiment was further boosted by the biggest increase in US consumer spending since July.
Germany’s Dax and France’s Cac-40 made gains of more than 1% today.
The pound was up against the dollar at 1.60 after the greenback fell on currency markets. But sterling was flat against the euro at 1.20.
But banks benefited from the improved sentiment today, with Barclays up 1.1p at 235.3p, HSBC adding 7.7p to 554.8p and Lloyds rising 0.2p to 33.6p.
The heavily-weighted mining sector also drove the market higher, after a weaker US dollar gave a boost to commodity prices, although it lost some of its earlier gains.
Antofagasta was up 30p to 1152p and Rio Tinto jumped 70.5p to 3446p.
Pharmaceutical giant AstraZeneca made slight gains after a US district court ruled its patent for depression treatment Seroquel XR was valid.
The ruling will help ward off generic rivals until the patent expires in 2017 and means four drug makers, including Mylan, were infringing the patent on the recipe for the drugs. Shares were up 0.5p at 2779p.
Outside the top flight, pork producer Cranswick was down 6p at 805p despite it unveiling a 10% jump in like-for-like sales in the three months to March 31 across all its products.
But the Hull-based group, which was formed by farmers in the 1970s, said margins would be squeezed this year.
And defence firm QinetiQ enjoyed a 6% rise after the Ministry of Defence said it had agreed to relax its control over the company.
The move is expected to help the Hampshire-based firm compete more effectively and give it more freedom to make acquisitions or sell off some divisions. Shares rose 9.6p to 159.3p.
The biggest Footsie risers were Petrofac up 83p at 1740p, Weir Group ahead 66p at 1764p, Man Group up 4.8p at 134.8p, and Evraz ahead 11.9p at 369.5p.
The biggest Footsie fallers were Shire down 98p at 2020p, Randgold Resources off 100p at 5370p, Vodafone down 2.3p at 172.2p, and British American Tobacco off 33p at 3150.5p.