Footsie finally pulls out of nosedive

The FTSE 100 Index finally pulled out of its nosedive today as investors hunted down cheap stocks following recent heavy falls.

Beleaguered financial stocks led the rally as the Footsie reversed an earlier modest decline to gain 67 points at 3738.1 by lunchtime.

While bargain hunters were in evidence, the mood across European markets was helped by better-than-expected business confidence data in Germany.

The improved sentiment is now forecast to extend to Wall Street, where the Dow Jones Industrial Average sank to a four-year low last night.

However, City experts warned today’s rally was likely to be only a temporary respite from the heavy falls that has seen the Footsie hit six-year lows.

Among brighter financial stocks Barclays rose 7%, Lloyds TSB added nearly 6% and Royal Bank of Scotland was 3% stronger.

Insurance stocks also recovered lost ground and included Prudential and Aviva, up 2%, and Royal & Sun Alliance ahead 4%.

Other factors lifting the London market included an encouraging update from heavyweight pharmaceutical giant AstraZeneca.

The group’s shares surged 4% after it said it had taken a key step towards launching its lung cancer treatment Iressa.

The Oncology Drugs Advisory Committee (ODAC), which reports to the US Food and Drug Administration, has voted in favour of accelerated approval.