FTSE up more than 100 points

Stocks soared on both sides of the Atlantic today in a welcome rally spurred on by a strong start to the second-quarter earnings season.

Signs of progress on BP's battle to plug the Gulf of Mexico oil leak also drove the Footsie higher, closing up 2% after a 104 point gain to 5271.

America's Dow Jones Industrial Average rose by more than 150 points fuelled by better-than-expected profits on Monday from aluminium maker Alcoa.

The group delivered the first of this year's second quarter results announcements on Monday night and provided some much-needed optimism over the recovery.

Despite yesterday's news that ratings agency Standard & Poor's still had the UK on negative watch - suggesting its AAA rating was still in jeopardy - the pound bounced back against the dollar - up nearly 1% to 1.52 dollars.

There was also relief for investors in the latest inflation figures, which showed a fall in the key CPI measure from 3.4% to 3.2% in June. This was in line with expectations and eased fears of an imminent hike in interest rates, although analysts said core inflation still remained a problem.

Among stocks, BP was almost 3% higher as it said it had installed a new sealing cap on the oil well, although it stressed the system had never been deployed at such depths and that its effectiveness cannot be assured.

Shares have risen 30% in the month so far and were ahead by another 11.4p at 410.4p.

Testing firm Intertek was one of the Footsie's biggest risers after a gain of 63p to 1640p, helped by a positive note from Bank of America Merrill Lynch.

But it was Aggreko that led the way, lifting 68p to 1637p after the company completed its work providing power to the World Cup in South Africa.

In corporate news, luxury goods group Burberry was 28p higher at 817.5p after better-than-expected first quarter sales figures, including a 27% rise in revenues as customers snapped up accessories and outerwear.

Outside the top flight, homewares retailer Dunelm was rewarded with a 6% rise in its share price after continued improvement in margins helped offset a weakening trend in its recent sales performance.

Analysts at Numis upgraded their profits forecast for the year to July by £2m (€2.4m) and described the retailer as one of its preferred picks in the sector. Shares were 21.9p higher at 379.9p.

In a decent session for retailers, Game Group lifted 5.5p to 67.7p and Home Retail Group added 7.7p to 233.2p.

One of the biggest gains in the FTSE 250 Index was achieved by JD Wetherspoon as investors geared up for a full-year trading update from the pubs chain tomorrow. Shares were 30.6p higher at 437.7p.

The biggest Footsie risers were Aggreko ahead 68p at 1637p, TUI Travel up 9.5p to 230p, Barclays up 12.7p at 312.6p and Wolseley up 56p at 1452p.

The only Footsie faller was Essar Energy down 3.8p to 435.2p.

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