The FTSE continued its rally in early trading today after an unprecedented pledge by the Fed to keep interest rates low to stimulate economic growth encouraged investors.
Wall Street rebounded yesterday setting the tone for markets across the globe. In tandem with positive export data from China showing a lift in July the move by the Fed — which will effectively freeze interest rates at near zero for two yaers — kickstarted share buying.
On the FTSE 100 financial stocks led the way as investors gained the confidence to invest in riskier shares, bringing the market back from the sub 5,000 mark seen at one stage yesterday.
Standard Life led the field, up almost ten per cent after reporting a rise in profit fuelled by cost cutting at the insurer. Also in the sector Legal & General was on the climb, up more than five per cent.
In banking HSBC edged up after announcing that it had sold its US card business to Capital One. Lloyds was up almost five per cent, RBS three per cent and Barclays 4.5 per cent.
Another of the top performing stocks was the world's largest hedge fund manager Man Group, which rose more than seven per cent. The rise came after its top three executives yesterday bought hundreds of thousands of pounds of its shares in a bid to shore up the price in the tough market. Meanwhile engineer Weir was up more than eight per cent.
TUI travel was up five per cent after stating that it was on track for full year forecasts despite the tough trading environment.
There were few significant blue chip losers although Standard Chartered was down almost two per cent after going ex dividend and losing its payout attraction. Barclays, BT Group, GKN, Rio Tinto, RSA Insurance, Schroders and Unilever also went ex-dividend knocking an estimated 6.9 points off the index.
Elsewhere the Nikkei in Japan closed up 1.1 per cent as Asian markets found their feet again.