The FTSE 100 Index rose by a record 9.8 per cent or 372.00 points at 4152.96 after the rescue of banking giant Citigroup helped ease some of the uncertainty seen the previous week. European investors were also encouraged by a second successive positive session for Wall Street markets, after a six per cent jump for the Dow Jones on Friday.

The Footsie was almost 300 points higher at the time of the Pre-Budget Report, before accelerating as markets responded favourably to Chancellor Alistair Darling's stimulus package for the UK economy.

The biggest gains came from the mining sector after improved confidence and a weaker dollar boosted crude oil and metal prices.

Kazakhmys led the way with a gain of 28 per cent or 50p to 2293/4p, while Eurasian Natural Resources was close behind with a rise of 551/4p to 257p.

The banking sector was another big riser as shares reacted to the US government's move to shore up Citigroup after the financial institution looked to be in something of a fragile state at the start of the weekend.

Lloyds TSB rose 18 per cent or 227/8p to 1475/8p and HBOS added 17 per cent or 123/4p to 86p, but Asian-facing bank Standard Chartered was down four per cent or 341/2p at 725p after it announced plans to tap shareholders for £1.8bn.

Barclays was another bank on the up, ahead 131/4p at 1461/2p, after winning a shareholder vote on its £7bn fundraising programme, albeit with a protest from a number of investors.

In an otherwise quiet day for corporate news, emergency home repairs group Homeserve's shares crashed 29 per cent in the FTSE 250 after it warned of a potential £3m blow to profits in tough market conditions. Shares fell 352p to 867p as investors also focused on a falling business retention rate, despite the company delivering results in line with expectations.

Fashion retailer Alexon was also under pressure, down 12 per cent or 13/4p to 131/4p, after an 11 per cent fall in like-for-like sales and a warning that margins were being impacted by the need for discounting activity.

Among the risers in the FTSE 250 index, Northern Foods climbed by more than 10 per cent or 51/4p to 551/4p after a report said that Wagon Wheels firm Burton's had appointed investment bankers to work on a strategic review. This raised hopes that private equity firm Duke Street, which owns Burton's, could look for potential consolidation deals, such as with the Fox's biscuits arm of Northern Foods.

A number of retailers benefited from the Chancellor's decision to cut VAT from 17.5 per cent to 15 per cent in the Pre-Budget Report.

Comet owner Kesa Electricals jumped 13 per cent or 81/4p to 721/4p, while Argos and Homebase firm Home Retail Group cheered 201/2p to 184p and Debenhams added 2p to 251/4p.

Marks & Spencer was seven per cent higher or 14p at 2181/4p, even though economists cast doubt over whether the VAT plan will do much to stimulate demand.

The biggest risers were Kazakhmys, up 50p at 2293/4p and Eurasian Natural Resources, ahead 551/4p to 257p.