Banks and miners fuel FTSE gains

Miners and banks fuelled a lift in the FTSE 100 as investor sentiment improved ahead of a crunch Eurozone summit.

The blue chip index mirrored Asia and the US where markets recovered from the ratings blow from Standard & Poor's, which threatened to downgrade 15 nations, including Germany.

There is mounting optimism that Eurozone leaders will agree a decisive plan to resolve the region's debt crisis, with hopes of fresh new measures such as further fiscal integration within the currency bloc as well as a bigger role for the European Central Bank to stem the region's debt crisis.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will propose to Friday's EU summit a plan to impose mandatory penalties on Eurozone states that exceed deficit targets.

Investors were also digesting official figures which showed that UK industrial output fell more than expected and at its fastest pace in six months in October.

On the FTSE 100 miners Randgold Resources, Xstrata and Vedanta all put on more than three per cent in early trading.

Lloyds was one of the top five climbers, up more than three per cent. Also in the banking sector Barclays was up 2.8 per cent and RBS 2.4 per cent.

Insurer Resolution gained more than three per cent after Deutsche Bank upgraded its stock from hold to buy on the grounds that it had little exposure to Eurozone debt.

Ex-dividend factors clipped 0.43 points off the FTSE 100, with Primark owner AB Foods and Investec both trading without their dividend attractions.

The biggest faller was interdealer broker ICAP, down four per cent while BSkyB, down 1.2 per cent, was another main loser.

On the FTSE all-share index, support services firm Carillion outlined cost-cutting measures that will see hundreds of jobs axed but said it was on track for the full year. Its shares lifted by around three per cent.

Meanwhile Investec will be one of three to be demoted from the FTSE 100 when the latest quarterly reshuffle of the index is announced after the London market close today.

Inmarsat and Lonmin are also expected to be demoted to the FTSE 250 index, with Irish building materials firm CRH and recently-listed Russian miners Evraz and Polymetal International seen entering the top index.

Across the Atlantic, the latest weekly mortgage and refinancing indices will be released, with US consumer credit numbers for October also due out later.