Markets rise on government action

Gloabl markets have responded positively to government action yesterday to shore up the financial system.

Actions to restore confidence in the banks announced in Britain were followed by other countries in Europe and are set to be adopted in the United States.

The FTSE 100 closed 2.07 per cent higher, following overnight gains on the Asian markets.

The Dow Jones Industrial Average closed up 936 points, its biggest ever points gain, 11 per cent higher than the previous session.

The index opened at 9,388.97 and contined to rise in morning trading.

In Japan, the Nikkei closed up a record 14 per cent, wiping out last Friday's 9.6 per cent drop.

By 08:37 BST, only half a dozen stocks were in the red on the FTSE 100, in stark contrast to last week's performance.

Banking and mining stocks led the rise. Barclays was up 15.33 per cent, Vedanta Resources rose 13.88 per cent and Kazakhmys was up 13.10 per cent.

HBOS was still falling and closed 15 per cent down to 76.5p per share, a lower level than before the deal with Lloyds TSB was announced.

Lloyds TSB was also down, by 7.41 per cent to 150p.

"Everything still looked strong up until the US open - but some caution here after an initially strong start has put some pressure on London," said Anthony Grech, market strategist for IG Index.

"On individual stocks, investors seemed to be switching out of Lloyds and HBOS and favouring Barclays - which has been the top gainer on the FTSE so far. It would seem they are voting with their wallets as to how the banks that now have a big chunk of government ownership are going to fare versus the competition in the near future."

Inflation figures hit 5.2 per cent this morning, higher than was expected.