FTSE up 2%

The FTSE 100 Index surged more than 2% ahead today as investors rode a wave of economic optimism and played catch-up after the bank holiday weekend.

Banking, mining and travel stocks all crowded the leaders’ board, ensuring a buoyant start to the week for the London market, which ended at its highest level since January. The Footsie closed 93.7 points ahead at 4336.9 in the wake of big gains on world markets on Monday.

Markets have seen growing optimism that the worse of the global recession could be over after a spate of better-than-expected economic data.

Today’s rises came after yesterday’s near-3% surge for the Dow Jones Industrial Average.

But Wall Street retreated today as Federal Reserve Chairman Ben Bernanke told the US Congress that, while the economy should start growing again later this year, economic activity is likely to be held back by more job losses.

Investors are also awaiting the results of US stress test results due later this week, which it is hoped will show banks do not need to raise as much capital as feared.

Lloyds Banking Group was the top bank riser, ahead more than 10%, or 11.5p at 121.1p. Royal Bank of Scotland followed closely behind with a 4p to 48p rise in a big week for the sector as RBS and Barclays – 19p higher at 298p – prepare to report on trading.

Asian-facing bank Standard Chartered added to the positive mood after a “strong” first quarter, delivering record levels of income and profit.

This helped Standard rise 90p to 1150p, while HSBC gained 35.5p to 515.5p.

Meanwhile increased optimism over the economy supported base metal prices and helped the heavyweight mining sector.

Vedanta Resources was a leading Footsie riser, up 11% or 130p to 1260p, while Kazakhmys rose 56.5p to 646.5p.

Travel firms and airlines recovered some of last week’s swine flu hit as concerns over the severity of the outbreak began to recede.

British Airways rose 17.9p to 165.9p and Thomson owner TUI Travel added 18p to 268p.

Among the few fallers was software group Sage after weekend reports of major job losses. The firm will post interims later this week but in the meantime shares were 3.5p lower at 185.3p.

In a quiet session for corporate updates, shares in Italian restaurant chain Carluccio’s jumped nearly 18% after it said it had received a preliminary takeover approach.

Richard Caring, the restaurateur who owns landmark London dining spots such as the Ivy, J Sheekey and Le Caprice, is a major shareholder in Carluccio’s and has recently been linked with speculation over a possible bid. Shares were 14p higher at 92.5p.