London’s FTSE 100 Index surged 5% today after banks and insurers enjoyed strong gains on expectations of further heavy interest rate cuts.
Old Mutual and Aviva were up by more than 20% while HBOS and Standard Chartered also rebounded amid the improved market sentiment.
Talk of imminent half point interest rate cuts in the United States and Japan had earlier propelled the Dow Jones Industrial Average to its second biggest points gain in history. The FTSE 100 Index stood 202.8 points higher at 4129.2 by mid-morning.
The economic stimulus hopes meant Old Mutual improved 10p to 49p, Aviva added 57.5p to 316.5p, Standard Chartered cheered 133p to 833p and HBOS rose 12.8p to 81.4p.
Energy and commodity firms were also higher after oil prices gained on expectations that rate cuts will prop up economic output. BP, which rose sharply in the wake of third quarter results yesterday, added another 6% or 28.5p to 489.75p.
In the mining sector, BHP Billiton rose 102.5p to 945p, a gain of 12%, while Kazakhmys added 27.5p to 260.5p.
There were only four stocks on the fallers board, including Friends Provident as the stock gave back a slice of the strong gains seen at the end of the session yesterday. Friends was down 7% or 4.9p at 60.1p.
Transport group Stagecoach was also under pressure, down 3.25p to 202.25p, despite reassuring that trading was in line with expectations. It said like-for-like revenues growth was 9.2% in the UK bus arm, with growth in South West Trains also holding up well.
Tesco struggled to make headway after an analyst at Shore Capital reported that UK’s biggest retailer was internally budgeting for like-for-like sales growth of 2% in the UK – compared to its usual guidance of 3-4%. Shares were 2.4p higher at 321.1p.