FTSE up 40 points

The London market gained ground today as banks shrugged off an alleged $50bn (€37.14bn) Wall Street fraud.

The FTSE 100 Index rose 40.7 points to 4321.1 by mid-morning as Asian markets rose on hopes of a rescue for US car makers from the Bush administration despite a Senate snub.

Expectations of an Opec production cut sent oil above $48 (€36) a barrel - helping several index heavyweights.

And most banks gained ground as positive sentiment over a recapitalisation by the Irish Government offset worries over potential losses from investments with Bernard Madoff, who was arrested last week.

Royal Bank of Scotland, which said it had a potential £400m (€445m) exposure, rose 0.9p to 57p. Hedge fund giant Man Group, another possible victim with £239m (€266m) in potential losses, added 4.25p to 250p.

HBOS was the biggest gainer, up 9.4p to 76.9p or 13%, despite a downgrade from brokers at Cazenove in the wake of Friday’s gloomy trading update. In a strong session for the sector Lloyds TSB also added 5p to 134.9p.

Firmer oil prices lifted BG Group 37p to 987p, while miners such as Xstrata and Kazakhmys – up 36.5p to 743p and 9.5p to 249.75p – cheered on stronger metals.

Among the fallers, Centrica shed more than 6% after the firm said it had sold 91% of new shares on offer under a £2.2bn (€2.44bn) rights issue.

Centrica will use the cash to fund an acquisition of a 25% stake in British Energy, but shares fell 16.75p to 235.5p as underwriters looked for buyers for the remaining 121 million shares.

In the second tier, car dealership Inchcape saw shares plummet more than 28% or 20p to 50.75p after its second profit warning in less than two months. The company said plunging car markets would leave next year’s profits “significantly” below previous expectations.