After the recent gloom, the London market bounced back in style today, with across the board rises in share prices.
Initially encouraged by a 286 point overnight rise on Wall Street - its biggest one-day percentage rise for more than four years - the optimistic mood was not even dampened during the afternoon by higher-than-expected US labour cost figures. This sent the Dow Jones Industrial Average around 50 points lower when it opened.
Despite this the FTSE 100 jumped 119.7 points to 6,308.8, a 1.93% increase. The FTSE 250 added 236.4 points to 11,235.2.
The optimism was partly driven by the hope of comforting words from US Federal Reserve boss Ben Bernanke this evening. The Fed is due to announce its latest interest decision, and most economists expect it to leave rates unchanged at 5.25%. Some had suggested it could even hint at a cut later this year.
There will also be close attention paid to what Bernanke says about the current credit squeeze following the sub-prime mortgage turmoil. Yesterday investors took some reassurance from reports that Fannie Mae and Freddie Mac, the US government-sponsored mortgage firms, might be allowed to take on more debt and thus help ease the funding pressures in the credit market.
On the London market Mike Lenhoff, chief strategist at Brewin Dolphin, said: "All the technical indicators I keep show that the FTSE 100 is more oversold as of last night's close than at any time during this sell-off in global equity markets. Either a bear market of unknown proportions has started, or there is an ideal buying opportunity at hand. We think it is the latter. Buying opportunities seldom look like buying opportunities until well after the event. It's time to buy and we wait to be proved wrong."
He particularly liked the look of the banks. "A number of them sell on yields we haven't seen for some time," he said.
Investors were not backward in following this idea.
Royal Bank of Scotland - still battling with Barclays to buy Dutch group ABN Amro - rose 20p to 589.5p. Barclays itself was 17.5p better at 698.5p, while Standard Chartered rose 57p to £16.27 after it unveiled a 30% jump in half-year profits and said it would consider acquisitions. It had been tipped as a possible buyer of South Africa's Nedbank, majority owned by Old Mutual, up 5p to 161p.
Cazenove said the results were strong: "Our initial reaction is to increase our earnings per share estimates by 3% and 2% for 2007 and 2008 respectively."
On the downside, traders noted that Cantor Fitzgerald had announced it was raising its margin rates applied to its contracts for difference and spread betting products by 10% "in the light of the current global credit market, and the volatility in the global equity markets". It added: "This change is expected to be temporary and rates will return to usual levels when the current increased volatility subsides."
Traders said this could hit investors who were believed to have used CFDs to build up stakes in companies such as Sainsbury's or Whitbread.
Later Cantor reportedly rescinded the rise for its major clients.
Insurance group Prudential added 19p to 704p as Citigroup issued a buy note on the company with an 875p target price. Citi pointed to the insurer's growth in Asia and the US, and said underlying cash generation would rise from £342m in 2006 to £1.12bn by 2010.
"The current dividend cost is £446m," said Citigroup. "By 2010 Prudential should be near net cash balance. The group will soon have choices - buybacks or acquisitions."
Speaking of acquisitions in the insurance sector, Friends Provident added 1.6p to 192.5p. The company had planned to merge with rival Resolution, but various parties have either stepped into the ring or may do so. Pearl Assurance has built up a stake in Resolution and wants to scupper the deal. Some believe Pearl may bid for Resolution, up 7.5p to 664p, while other businesses are said to be interested in Friends. One of those, Standard Life, reported better-than-expected new business figures today and saw its shares climb 11p to 326p.
British Airways was wanted, up 16.75p to 416.75p in the wake of positive figures from Air France and easyjet, up 37.5p to 545.5p.
Capita, the outsourcing business behind the London congestion charge, climbed 39p to 748.5p. The company reported a decent set of half-year results at the end of July, with an upbeat response from analysts. But the shares lost ground along with the rest of the market. Now brokers say buyers are catching up and are pushing Capita higher.
Miners were, in the main, lifted by a rise in the copper price. BHP Billiton rose 33p to £13.66, while Anglo American added 113p to £27.98 after ABN Amro upgraded its recommendation from hold to buy and JP Morgan raised its price target from £28.80 to £30.70.
An exception was Xstrata, which fell 59p to £28.72 as it announced a $1bn offer for South Africa's Eland Platinum alongside results slightly below expectations.
After an initial fall Scottish & Newcastle ended 13.5p higher at 585.5p, despite reporting lower-than-forecast first-half profits of £191m and warning that the recent bad weather would make it difficult to meet its full-year targets.
Hotel group Millennium & Copthorne slumped 65p to 518p as it accompanied news of a 44% rise in second-quarter profit with news that chief executive Peter Papadimitropoulos was leaving after less than six months in the job.
Back among the risers, Tesco added 10.5p to 419.75p as Deutsche Bank moved its rating from hold to buy and raised its target price from 430p to 500p.
"We believe the recent sell-off in Tesco, seemingly on concerns about Tesco UK, fundamentally misunderstands the UK food retail industry and Tesco's position within it," said Deutsche. "The UK market is stronger than recent weather-driven trends have suggested and inflation is here to stay. We are very comfortable about Tesco UK.
"We have also examined the prospects for Tesco US which we think could be worth at least 20p a share but has far greater strategic significance. The US offers emerging market growth prospects with good returns, relatively quickly."
Meanwhile pubs group Mitchells & Butler added 10p to 708p after last night's confirmation that entrepreneur and potential property partner Robert Tchenguiz had raised his stake to 18.81%.
Better than forecast figures from car dealer Pendragon saw its shares accelerate 9.25p to 82p.
Lower down the market, medical group Omega Diagnostics recovered after yesterday's placing and acquisition, adding 0.225p to 0.975p.
Telecoms equipment group Scotty rose 0.075p to 1.225p after news of a deal with Eurocopter, while set-top box maker Pace Micro Technology added 1.5p to 109.75p after it announced a new contract win for digiboxes from BSkyB. Pace's shares were hit last week on doubts about its continuing business with Sky once the latter bought Sir Alan Sugar's rival box-maker Amstrad.
Property group Erinaceous added 5p to 184p. Traders had speculated that takeover talks - thought to be with HBOS - might have run into difficulties. Today the company said talks to take the company private were continuing, although it did not name any of the potential backers of the deal.
But Avanti Screenmedia lost another 2.25p to 3.5p after its trading update yesterday, announced just before the market closed. It said it was urgently seeking new funding for the business.
Finally Davenham, which specialises in lending to small businesses, was in the takeover spotlight. Finance group ACP Capital has increased it stake in Davenham to 29.2%, prompting traders to speculate it could be lining up a bid. Davenham was steady at 330.5p.