London hits 11-week high on hopes of increases in euro-area rescue fund

FTSE: 5,488.65 (+103.97) Mid-250: 10,265.49 (+154.35) Small Cap: 2,801.02 (+26

FTSE: 5,488.65 (+103.97) Mid-250: 10,265.49 (+154.35) Small Cap: 2,801.02 (+26.27)UK STOCKS climbed to an 11-week high yesterday, as European policy makers considered unleashing $1.3 trillion to help contain the debt crisis as they sought to break a deadlock between Germany and France.

The benchmark FTSE 100 Index added 1.9 per cent in London.

The gauge has tumbled 9.9 per cent since February amid concern that the debt crisis is worsening and the economy is faltering. The broader FTSE All-Share Index also rose 1.9 per cent yesterday.

“Most traders appear to be waiting in the shadows, happy to see what the latest round of Franco-German political arm- wrestling will throw up come Monday,” Yusuf Heusen, a sales trader at IG Index in London, said. “Those who have ventured out looking for action have been broadly positive.”

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Euro-area leaders may combine the region’s temporary and planned permanent rescue funds as of mid-2012 to release as much as €940 billion to fight the debt crisis. The plan is also aimed at breaking an impasse between Germany and France.

The leaders will meet tomorrow and again three days later.

“Markets have sidestepped this week, disappointed the event wasn’t sooner, but it’s not the end of the world,” said Graham Bishop, a European equity strategist at the Royal Bank of Scotland. “If the discussions had broken down, it would have been a whole different ballgame.”

Barclays led banks higher, surging 5.8 per cent to 181.95p. Lloyds Banking climbed 3.9 per cent to 32.87p. Royal Bank of Scotland rose 3.4 per cent to 24.43p.

A report showed UK consumer confidence fell for a fourth month in September as unemployment and inflation squeezed Britons, Nationwide Building Society said.

Rio Tinto, the world’s second-biggest mining company, advanced 4.5 per cent to 3,151p.

Antofagasta gained 5.5 per cent to 1,096p.

BG rose 2.7 per cent to 1,354.5p after Nomura advised buying the shares and called the stock one of its best investment ideas among integrated oil companies.

Weir, the Glasgow-based engineering company, rallied 5.9 per cent to 1,773p.

Intercontinental Hotels rose 5 per cent to 1,115p after Morgan Stanley included the company on a list of “high conviction” shares. – (Bloomberg)