FTSE:5,295.05 (+204.68) Mid-250:10,110.72 (+271.48 ) Small Cap:2,827.44 (+41.60)

BRITAIN’S TOP share index gained strongly yesterday, posting its biggest one-day percentage gain for 16 months, boosted by a rally from commodity stocks and advances by banks on increased hopes that European leaders will take decisive action to alleviate the debt crisis encouraged investors.

Banking stocks, among the most sensitive to the twists in the euro zone debt saga, extended Monday’s gains, led by Royal Bank of Scotland and Barclays, up 7.1 per cent and 5.6 per cent respectively.

As a turbulent month and quarter draw to a close, the blue chip FTSE index was down about 2 per cent in September and had fallen by about 11 per cent since the end of June.

Miners were the biggest blue-chip gainers, having been the big fallers on Monday. Antofagasta stood out, up 10.7 per cent, as copper rebounded from a 14-month low in the previous session.

The gold price also rallied after recent sharp falls, helped by an easier dollar, with Fresnillo adding 10.3 per cent as Citigroup upgraded it to “hold” on valuation grounds.

Vedanta Resources was the top FTSE 100 gainer, ahead 11.8 per cent. The board of India’s state-run Oil and Natural Gas Corp has decided to issue a no-objection certificate for Vedanta’s deal to buy a majority stake in oil and gas explorer Cairn India. The stake seller Cairn Energy gained 5.2 per cent.

Other energy issues also pushed higher as crude rebounded more than 4 per cent higher, with BP and BG Group up 5.2 per cent and 6.7 per cent respectively.

Among individual blue-chip risers, engineer Weir Group added 5.8 per cent as Goldman Sachs reiterated its “conviction buy list” rating on the stock, which was the worst performer in its Capital Goods universe last week.

Emerging markets doorstep lender International Personal Finance was the top FTSE 250 gainer, up 14.7 per cent after JPMorgan Cazenove upgraded its rating to “neutral” from “underweight” on valuation grounds.

“You have to stress the importance of it being the quarter-end on Friday,” a London-based trader said, “particularly as the market has rallied into the month-end six out of eight times so far this year, only to be followed by sharp falls straight afterwards, but it’s all linked to short positions and derivatives with very little cash trading.” – (Reuters)