Britain's top share index surged 6 percent early today, recouping some of last week's heavy losses as a government plan to pump billions of pounds into the troubled banking sector lifted flagging sentiment.
By 10 a.m. the FTSE 100 had gained 236.3 points to trade at 4,168.3 after falling 8.9 percent on Friday and haemorrhaging 21 percent last week, its biggest fall since 1987.
Banks gained after the British government said it would make capital investments worth 37 billion pounds ($64 billion) in RBS and a merged Lloyds TSB and HBOS. The FTSE 350 banks index surged 7.6 percent.
Lloyds gained 11.4 percent after it said it had renegotiated its agreed takeover of rival HBOS, dropping its offer to 0.605 of a Lloyds share for every HBOS share, down from the 0.833 agreed on Sept. 18.
HBOS was down 9 percent, the only stock in the blue-chip index showing a loss.
"The market is giving a positive first verdict to the weekend's events. I don't think any more could be expected as the scheme was large, coordinated and covers all angles. Let's hope it works," said Paul Kavanagh, head of market strategy at stockbrokers Killik.
BARCLAYS BOOSTED
Barclays gained 13.5 percent after it said it would boost its capital by more than 6.5 billion pounds but expected to do so without government help.
"I suspect that Barclays have shown the way by saying that they can go out to Asian, Middle Eastern investors and some of their own investors and saying we don't need to take this money from the government, so its quite a confidence statement," Kavanagh said.
Standard Chartered gained 8.7 percent after it said it meets UK capital requirements and was well capitalised and highly liquid.
Other financial stocks also gained on the government measures, with insurers Aviva, Prudential, and Standard Life up between 3.2 and 6.7 percent, while interdealer broker ICAP was up 6.6 percent.
Energy stocks gained as oil climbed more than $3, recouping some of Friday's 10 percent dive, as nervousness on the future of the world economy eased somewhat.
BP, BG Group and Cairn Energy advanced between 3.6 and 11.4 percent.
Heavily pressured mining stocks also rallied as metals surged, with copper gaining over 7 percent and gold up 2 percent, also recovering ground after last week's heavy losses.
Anglo American, Kazakhmys, Eurasian Natural Resources, Rio Tinto and Lonmin strengthened between 6.5 and 10.4 percent.
Retailers were supported on hopes that the bank recapitalisation would prevent a deep recession.
Kingfisher added 1 percent, Marks & Spencer put on 3.8 percent, and Next gained 4 percent.