World markets rally after ECB pledge

World markets rallied higher today after the boss of the European Central Bank pledged to do “whatever it takes” to keep the euro together.

Hopes of a solution to eurozone debt woes were raised after ECB president Mario Draghi made the resolute comments at a conference in London, suggesting he may restart buying Government bonds to ease the pressure on Spain’s borrowing costs.

The FTSE 100 Index leapt 1.4% higher, up 74.8 points at 5573.2, while the Cac 40 in France soared 4.1% and Germany’s Dax ended 2.8% higher.

The Dow Jones Industrial Average in the US rose 1.3% in early trade, despite disappointing economic figures showing a fall in durable factory goods orders.

Spanish bond yields, which have pushed beyond 7.5% in recent days amid fears the country will need a full-blown bail-out, eased back down below 7%.

Sterling, which was hit yesterday on the shock second quarter GDP fall, was higher against the euro and the dollar.

The pound rose to $1.57 – its highest in nearly a week – and to €1.28.

In a busy session for corporate updates in London, ITV surged 6% after its 15% jump in half-year underlying profits to £235m more than offset expectations for weaker advertising revenues in July and August.

Shares rose 4.5p to 75.9p, while BSkyB was 21.5p higher at 706.5p after it posted record annual operating profits of £1.2 billion and unveiled plans for a further £500m share buyback.

The broadcasters were joined on the risers board by Rolls-Royce after the engine giant reported a 7% rise in underlying profits and said its order book rose 4% to £60.1bn.

Shares lifted 7% or 55.5p to 885p as Rolls revealed a record-breaking 1,100 orders for a new Trent engine.

But Royal Dutch Shell was the biggest faller in the top flight after the oil giant reported a sharper-than-expected drop in profits.

Chief executive Peter Voser insisted the Anglo-Dutch company was “moving forward in volatile times” but a 13% fall in second quarter profits due to declining energy prices was well below City hopes. Shares were down 57p at 2208p.

Lloyds Banking Group slipped onto the fallers board after it took an additional £700m hit for mis-selling payment protection insurance.

The 40% state-owned bank revealed pre-tax losses of £439m for the six months to June 30, compared with a £3.3bn loss a year earlier. Shares were 0.2p lower at 29.1p.

Meanwhile, the UK’s second-biggest pharmaceuticals group AstraZeneca said core pre-tax profits dropped by a quarter to $5.1bn and revenues fell 16% to $14bn.

Astra, whose chief executive David Brennan quit in June after shareholder pressure, said nearly all the revenues fall came as a result of generic competition. But shares reversed earlier falls to rise 4.5p to 2913.5p.

The biggest Footsie risers were Polymetal International up 62p to 873.5p, Rolls-Royce up 55.5p to 885p, ITV ahead 4.5p to 75.9p and Unilever up 116p to 2256p.

The biggest Footsie fallers were Royal Dutch Shell down 57p to 2208p, Admiral off 18p to 1118p, Carnival down 30p to 2083p and Pennon down 9p to 754.5p.