FTSE's rally continues

The rally on the London market continued apace today as strong gains from banks and oil majors saw the FTSE 100 Index advance another 5.4%.

The FTSE closed 219.7 points higher at 4282.7 after a late session burst, with early gains on Wall Street adding momentum to the rebound.

Today’s gains followed a rise of more than 5% on Friday and market experts said trading had shown signs of returning to normality after the recent heightened volatility.

But there were still sharp fluctuations seen by a number of stocks and sectors today as investors eyed opportunities.

A near-2% surge soon after opening on America’s Dow Jones Industrial Average helped gains in London more than triple from just under 70 points at the mid-session stage.

The biggest upward impact came from the energy sector after crude futures rose on signs that OPEC will cut production in order to stem the recent sharp fall in prices. BP lifted more than 10% or 45p to 476.75p and Royal Dutch Shell added 144p to 1494p.

There were similar increases in the mining community, with Rio Tinto ahead 295p at 2386p and Vedanta Resources up 64.5p at 688.5p.

The gains offset another nervy session for some insurers amid concerns about the impact of the economic downturn on investments held in the sector.

RSA Insurance was the biggest faller with a drop of 3% or 3.7p to 116.3p, while Aviva fell 1.75p to 306.5p.

Prudential bucked the trend, rising by 22% or 60.25p to 330.25p, amid speculation it could attract external investment as part of an attempt to buy the Asian arm of troubled US giant AIG. Pru shares fell heavily at the end of last week.

It was joined on the risers board by some of the UK’s beleaguered banks, with Royal Bank of Scotland up 15.9p at 84.5p and Barclays ahead 15.75p at 236.75p.