FTSE enjoys biggest one-day rise ever

The London market bounced back from Friday’s five-year low in spectacular fashion today.

The FTSE 100 Index rose by a record 9.8% or 372.1 points at 4153 after the rescue of banking giant Citigroup helped ease some of the uncertainty seen the previous week. European investors were also encouraged by a second successive positive session for Wall Street markets, following a 6% jump for the Dow Jones Industrial Average on Friday.

The Footsie was almost 300 points higher at the time of the pre-Budget report, before accelerating as markets responded favourably to Chancellor Alistair Darling’s stimulus package for the UK economy.

The biggest gains came from the mining sector after improved confidence and a weaker dollar boosted crude oil and metal prices.

Kazakhmys led the way with a gain of 28% or 49.95p to 229.75p, while Eurasian Natural Resources was close behind with a rise of 55.25p to 257p.

The banking sector was another big riser as shares reacted to the US government’s move to shore up Citigroup after the financial institution looked to be in a fragile state at the start of the weekend.

Lloyds TSB gained 18% or 22.9p at 147.6p and HBOS added 17% or 12.7p to 86p, but Asian-facing bank Standard Chartered was down 4% or 34.5p at 725p after it announced plans to tap shareholders for £1.8bn (€2.1bn).

Barclays was another bank on the front foot, up 10% or 13.3p at 146.5p, after winning a shareholder vote on its £7bn (€8.2bn) fundraising programme, albeit with a protest from a sizeable number of investors.

In an otherwise quiet day for corporate news, emergency home repairs group Homeserve’s shares crashed 29% in the FTSE 250 after it warned of a potential £3m (€3.5m) blow to profits in tough market conditions. Shares fell 352p to 867p as investors also focused on a falling business retention rate, despite the company delivering results in line with expectations.

Fashion retailer Alexon was also under pressure, down 12% or 1.75p to 13.25p, after an 11% fall in like-for-like sales and a warning that margins were being impacted by the need for discounting activity.

Among the risers in the FTSE 250, Northern Foods climbed more than 10% or 5.25p to 55.25p after a report said Wagon Wheels firm Burton’s had appointed investment bankers to work on a strategic review. This raised hopes that private equity firm Duke Street, which owns Burton’s, could look for potential consolidation deals, such as with the Fox’s biscuits arm of Northern Foods.

A number of second-tier retailers benefited from the Chancellor’s decision to cut VAT from 17.5% to 15% in the pre-Budget report.

Comet owner Kesa Electricals jumped 13% or 8.25p to 72.25p, while Argos and Homebase firm Home Retail Group cheered 20.5p to 184p and Debenhams added 2p to 25.25p.

In the FTSE 100 Index, Marks & Spencer was 7% higher or 14p at 218.25p, even though economists cast doubt over whether the VAT plan will do much to stimulate demand.

The biggest risers were Kazakhmys up 49.95p at 229.75p, Eurasian Natural Resources ahead 55.25p to 257p, Xstrata up 153p at 808p and BHP Billiton ahead 182.5p at 980p.

The biggest fallers were Standard Chartered down 34.5p at 725p and Schroders off 0.5p at 540p.