The FTSE 100 marked its fourth day of gains today following the turbulence across global financial markets last week, ending up 109.8 points at 6195.9 as miners reported strong profit results due to high metal prices.
Britain's index of 100 leading shares hit a session high of 6196.6, extending gains from the beginning of the week. Markets in Asia and the US were also steady with the Hang Seng ending up earlier in the day despite China's latest interest rate rise yesterday. Meanwhile Wall Street was also making firm gains at the close of the London market, as investors' optimism was boosted by renewed deal activity and rising speculation that the Federal Reserve might cut interest rates soon to relieve fears of a global credit crunch.
The FTSE 100 was buoyed by miners who emerged as the main winners of the day after BHP Billiton, the world's biggest mining company, posted a 19% jump in its second-half earnings due to rocketing sales of copper, iron ore and coal. The company added that it expected strong growth to continue in the future on the back of high demand from Asia. Its shares jumped by 4.23% or 55p to £13.56.
Higher metal prices also pushed up the shares of Antofagasta by 35.5p to £6.85, while Anglo American, the world's third-largest miner gained nearly 12.5p to £27.33. Rio Tinto also enjoyed gains of near 6%, with shares standing at £32.56.
Commodity prices have surged to their highest levels in real terms since the 1970s. Copper prices dipped mid-year but recovered to finish above $7,000 a tonne. Aluminium rarely traded below $2,400 a tonne.
Expectations among the City that central banks will take further action to ease credit woes raised demand for financial shares as investors bought back into stocks which have suffered from recent stock market turmoil.
Mortgage lender Northern Rock, which bore some of the heaviest losses last week, rose by 23.5p to 725.5p. Man Group, the world's largest-listed hedge fund group was one of the best performers on the FTSE100 rising by 4.53% or nearly 21p to 478.75p.
Elsewhere in the banking sector, HSBC, Lloyds TSB, Alliance & Leicester and Royal Bank of Scotland all rose.
Barclays shares rose by 2p to 630p after sources say the bank's president said he still wanted to acquire Dutch rival ABN AMRO despite volatility in financial markets.
Sources also say that the bank was the borrower who had tapped into the Bank of England's standing facility on Monday. The Bank refused to comment on the identity of the borrower but said it had lent £314m at 6.75% - one percentage point above the bank rate for the first time since the market turbulence began at the end of the month.
Prudential led the way for UK insurers in clawing back heavy losses, gaining 25p to £6.79.
Legal & General were up over 3%, while larger rival Aviva was up 1.76% after the stocks of many life insurers hit 2007 lows last week.
Punch Taverns was one of the biggest winners on the FTSE 100, enjoying a 60.5p rise in shares to £10.37 after JPMorgan said the stock presented a good buying opportunity despite weak summer trading.
Elsewhere, iSoft shares were up 5.75p at 70.25p after it was announced late afternoon yesterday that a smaller Australian rival, IBA Health, has teamed up with a private equity firm to raise its previous offer by 21%. The improved 69p offer now values the cash-strapped British firm at £166.3m.
Meanwhile, Antisoma, a British cancer specialist, was one of the biggest gainers across the British stock market, with its shares leaping up by 15.79% or 4.5p at 33p today after it reported positive results from an intermediate trial of its experimental lung cancer drug.
In April Antisoma signed a £445m deal with Swiss pharmaceutical giant Novartis to develop the drug, ASA404, which is designed to fight non-small cell lung cancer, the most common form of lung cancer.
On the FTSE 250, steel structures firm Severfield-Rowen saw the biggest gains after announcing today it had agreed to buy steel fabricator Action Merchants for around £90m in shares and cash. Shares in the company, which is making new structures for Terminal 5 at Heathrow Airport and Wimbledon tennis club's new centre court, rose by 193p to £22.77.
Tullow Oil continued to be one of the top risers after the independent oil explorer said it had made a second "significant" oil discovery in Ghana, supporting investors hopes of a billion-barrel structure.
The London-based company saw its shares traded up 21.5p at 490p.
Among the losers was Corporate Service, a staffing firm whose shares fell almost 25% after it announced that its accounts needed to be restated as around £950,000 of rebates had not been accounted for.
Analysts tried to reassure investors that there was improving profitability in the group, but shares slipped by 1.70p to 5.11p.
Stagecoach suffered minor losses despite a first-quarter trading statement revealing the company was ahead of its expectations despite floods in Britain disrupting parts of its UK operations. The company's shares edged down by 0.5p to 200.5p