The FTSE 100 Index roared to its biggest-ever one-day gain today as hopes of a solution to the crisis gripping the financial system sent shares soaring.
The Footsie piled on 431.3 points to 5311.3 at the close – a mammoth 8.8% - adding around £103 billion to the value of the index.
The unprecedented rise – led by gains for banking stocks – takes the Footsie to just 100 points below the point at which it began a tumultuous week.
It came after the Financial Services Authority imposed a temporary ban on short-selling in financial stocks and US Treasury Secretary Hank Paulson announced plans to rescue banks from the “toxic” assets that have led to the crisis.
Mr Paulson said the bail-out could cost “hundreds of billions”, but was better than the dire alternative of prolonged turmoil.
The mood was similar worldwide, with Hong Kong’s Hang Seng Index up 9.6% and Japan’s Nikkei 225 closing 3.8% higher. In Europe, France’s CAC 40 shot up more than 9% and Germany’s DAX added 5.6%. Wall Street’s Dow Jones Industrial Average surged nearly 4%.
In London, Royal Bank of Scotland was benefiting most from the shot in the arm, up 32% or 51.7p to 213.5p.
Lloyds TSB, which fell sharply yesterday on fears over its financial strength, gained 20% or 48.25p to 285.75p as it announced plans to boost its capital.
Barclays cheered 88p to 389p, and Halifax Bank of Scotland almost exceeded its 232p a share takeover price following a rise of 49.9p to 222.5p.
Second tier bank Bradford & Bingley also joined the party, up 11% or 2.75p to 27.75p.
The gains extended to insurers with Prudential up 114p at 600p, up 23%. Friends Provident was 18.5p higher at 104p and Norwich Union owner Aviva ahead by 87.25p to 565p.
And housebuilders were buoyed by the improved sentiment, with FTSE 250 listed Taylor Wimpey up 8p to 55p. Rival Persimmon added 41.5p to 435.25p.
Defensive top-flight stocks were out of favour with investors as supermarket chain Morrisons fell 2.5p to 256p. Among just six Footsie fallers, British American Tobacco – another regular safe haven – shedded 25p to 1805p.
A positive sales picture for fashion goods from department store John Lewis meanwhile saw Next add 135p, or 12%, to 1247p. And second tier rival Debenhams was also in better shape, rising 6p to 49p.
There was little in the way of corporate news to deflect attention from the share price rally.
Even publishing and conferencing group Informa escaped a sell off after private equity bidders said they were no longer interested in bidding for the firm. Shares added 1.5p to 343.5p as Informa said it continued to trade in line with expectations.
The biggest Footsie risers were RBS up 51.7p at 213.5p, Kazakhmys ahead 188.5p at 788.5p, Barclays up 88p at 389p and HBOS up 49.9p at 222.5p.
The biggest Footsie fallers were ITV off 1.5p at 45p, British American Tobacco down 25p at 1805p, Unilever off 15p at 1500p and Morrison down 2.5p at 256p.