FTSE extends rally after Eurozone deal

THE FTSE 100 resumed its rally in early trading but gains were modest compared with yesterday when the Eurozone's debt plan breathed new life into flagging global markets.

World stocks headed for their best week in over two years bolstered by EU leaders' efforts to contain the Eurozone debt crisis by increasing the bailout fund and agreeing to write off 50 per cent of beleaguered Greece's debt.

Risk appetite was further supported by yesterday's US data showing the world's largest economy grew at its fastest pace in a year in the third quarter, a welcome relief for investors who have been pricing in the risk of a double-dip recession.

The FTSEurofirst 300 index of leading European shares was up 0.2 per cent at 1,021.67 points in early trade.

On the FTSE 100 - which is up more than four per cent on the week, and is headed for over an 11 per cent rise on the month - the banking sector picked up on gains from yesterday as the Eurozone deal continued to have an afterglow.

RBS and Barclays were both up 1.4 per cent while Lloyds also edged up by more than one per cent. Barclays has been boosted by an upgrade to "overweight" from "neutral" by JP Morgan Cazenove and its price soared yesterday.

Investment bank Schroders was also one of the top climbers, up more than one per cent. The other star performers on the index were materials technology company Johnson Matthey, up 1.7 per cent, and iPhone chip maker Arm Holdings, which rose by 1.7 per cent.

Among fallers on the blue chip index Sainsbury's nudged down by 0.75 per cent along with BP. Mining and energy stocks were the main drag on the market.

In Asia the Nikkei closed up 1.3 per cent and the Hang Seng 1.6 per cent.

Meanwhile UK economic data released overnight showed UK consumer confidence fell in October and is at its lowest level since February 2009.