BANK SHARES LEAD RALLY

The FTSE 100 index of leading shares rose almost two per cent, ending the day on 4243 points.

Banking shares were among the big winners with Royal Bank of Scotland up by more than 14 per cent and Barclays and Lloyds rising around nine per cent.

The bounce followed upbeat comments from the US Federal Reserve suggesting their economy was showing signs of recovery.

Figures from Japan also point to the first signs of a fightback, causing some traders to predict the start of a bull (rising) market.

The rally follows gains this week, with the Footsie up by more than 160 points in the last two sessions.

Stock markets across Europe were also higher, with the Cac 40 in France and Germany’s Dax both up around 1.4 per cent. Yet other data out yesterday suggested caution.

Nationwide Building Society said UK house prices fell by 0.4 per cent in April, reversing some of the surprise 0.9 per cent gain it reported in March, while unemployment in Germany also soared to higher-than-expected levels.