FTSE up 4% in morning trading

The FTSE 100 Index powered to gains of almost 4% today as investors took a lead from buoyant US markets in the latest twist to a volatile week.

The London market was 204 points ahead at 5813.3 by mid-morning – riding the wave of a 300-point gain for Wall Street’s Dow Jones Industrial Average, reversing heavy early falls.

Talk of a US Government bail-out for bond insurers eased fears of more credit crunch losses and lifted Asian markets overnight.

Even shock news of one of the biggest banking frauds of all time – a hefty £3.7 billion – and sub-prime writedowns at French bank Societe Generale failed to dent the mood as European indices also rose.

In London, the leading Footsie riser was Halifax Bank of Scotland – up almost 10%, or 60p to 693p. Traders highlighted strong sales at its majority-owned financial services firm St James’s Place Capital, which jumped 15%, or 36.5p to 280.5p in the FTSE 250.

Other major banking stocks lent weight to the benchmark index on the brighter US news. Lloyds TSB rose 33.75p to 443.75p, Royal Bank of Scotland was up 26.25p at 393p and Barclays 31p ahead at 485.75p – the trio all posting gains of 7% or more.

The London Stock Exchange – a beneficiary of the recent market volatility - also cheered investors after a healthy trading update, up 120p to 1698p. Interdealer broker Icap, which also gains from heavy trading activity, moved 52p higher to 636p.

Meanwhile, insurer Prudential continued to benefit from rumours of a Chinese takeover bid – sending shares 45.5p higher to 671.5p.

But fading hopes of a £7.8 billion bid for Foster’s brewer Scottish & Newcastle from its European suitors before midday’s Takeover Panel deadline hit the firm’s shares, which were down 5p at 730p. It was one of just three blue chips in negative territory as the wider market soared.