World markets continue to stabilise

London shares continued their rebound today after co-ordinated efforts to stabilise the financial sector boosted markets worldwide.

Japan’s Nikkei 225 soared 14%, its biggest one day rise, while New York’s Dow Jones Industrial Average lifted 11%, the index’s biggest daily jump since the Great Depression.

The FTSE was 226.84 points higher at 4482.8 by mid-morning, a gain of 5% after an 8% jump seen yesterday in the wake of the government’s £37bn (€47.46bn) banking sector recapitalisation.

Firms in the financial sector remained volatile as investors continued to digest the rescue moves announced on Monday. Royal Bank of Scotland, which is in line to receive £20bn (€25.65bn), was up 7% or 4.4p to 70.1p, but merger partners HBOS and Lloyds TSB surrendered gains to stand in negative territory.

HBOS was down 0.1p at 89.9p, while Lloyds TSB was 5.6p lower at 156.4p.

Barclays, which does not intend to use government cash to bolster its capital position, was 27.5p higher at 242.75p.

The biggest boost to trading came from oil companies amid hopes that this week’s developments will have gone some way to propping up demand.

Oil prices were up by more than three US dollars to 84 dollars, helping BP rise 8% or 33.75p to 452p and Royal Dutch Shell by 113p to 1500p.

In corporate news, chocolate firm Cadbury made strong gains after posting a 6% rise in third quarter revenues. Panmure Gordon said the performance suggested that the company’s product range was strong enough to weather the economic storm. Shares were up 6% or 30.75p to 529.5p.

Whitbread made similar progress, up 37.5p to 1007p, after it reported a 24% rise in half-year profits and said it continued to make good progress.