FTSE solid as Eurozone pledge boosts confidence

The FTSE 100 opened steadily this morning as investors eyed the news that Franco-Belgian bank Dexia has been rescued while Germany and France pledged to unveil a Eurozone debt crisis plan by the end of the month.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said after talks in Berlin on Sunday that their goal was to come up with a sustainable answer for Greece's woes.

They are hatching a plan on how to recapitalise European banks and present a plan for accelerating economic coordination in the Eurozone with a deadline of the G20 summit in Cannes at the beginning of November.

In the short term Belgium said it would buy the Belgian banking business of stricken lender Dexia for €4bn (£3.4bn).

On London's blue chip index this morning the biggest riser was iPhone chip maker Arm Holdings, up 1.8 per cent. A string of companies rose by around 1.5 per cent including BP, BAE Systems, engineer Weir Group and medical supplier Smith & Nephew.

Oil was among the top performers as investors were tempted to forage around for bargains in so-called riskier assets.

Royal Dutch Shell rose 0.7 per cent as industry sources said the firm is restarting the largest crude distillation unit at its Singapore refinery less than two weeks after the plant was shut because of a fire.

UBS said it is now appropriate to shift from an "underweight" to a more "neutral" stance on risk assets.

Meanwhile miner Antofagasta nudged down by 1.3 per cent while commodities giant Glencore was also in the top five fallers on the index, with its stock 0.7 per cent off.

Michael Page International shed 4.3 per cent, as the British recruiter commented on uncertainty in its markets in a third quarter trading update prompting Altium Securities to downgrade its rating to "hold" from "buy".

Among banks HSBC was the worst performer in early trading, down 0.8 per cent followed by RBS which lost 0.7 per cent although the sector was relatively solid following the Dexia announcement. Lloyds was up 0.6 per cent and Barclays up 0.4 per cent.

Other fallers on the FTSE 100 included engineer GKN, which edged down by around one per cent while British Land was off by more than one per cent.

European stocks overall gained 0.2 per cent with European banking sector fighting to get its house in order. BNP Paribas and Societe Generale denied they would seek to raise a combined €11bn (£9.5bn) as part of a broader European recapitalisation plan.

In Asia the Nikkei closed up 0.8 per cent while the Hang Seng saw a slim rise of 0.02 per cent.