UK, US and European figures all indicated that the manufacturing sector, while still in decline, was gradually returning to health.

The Footsie closed up 91.50 points at 4340.71 yesterday amid stock markets rises right across the world.

In the UK the Chartered Institute of Purchasing & Supply's (CIPS) report said output in the industry rose for the first time since March 2008 last month, while its overall activity index was at a 13-month high.

Wall Street was also buoyed by similar survey data of easing decline for the sector and the Dow Jones Industrial Average rose more than 1 per cent in early trade.

US manufacturing contracted less than expected in June, underscoring growing sentiment among investors that corporate profits will benefit from the recovery.

The US earnings season gets into gear next week.

In London, mining and energy stocks saw strong advances amid a bounce back in commodity prices following falls on Tuesday, including a gain in the cost of oil as benchmark crude for August delivery advanced above 70 dollars a barrel on the New York Mercantile Exchange.

Vedanta Resources set the pace with a rise of 10 per cent, or 127p, to 1415p, while Antofagasta lifted 37p to 6241/2p and gas explorer BG improved 43p to 1061p.

Oil major BP was 121/4p higher at 490p and rival Royal Dutch Shell added 30p to 1556p.

Improving sales figures from retail giant Marks & Spencer sent its shares up 4 per cent after it reported a better-than-expected 1.4 per cent drop in first quarter like-for-like sales.

M&S was one of the leading risers after executive chairman Sir Stuart Rose said he saw a more stable picture for consumer confidence.

Shares were 111/2p higher at 3171/2p.

The group's first quarter sales showed a marked improvement on previous quarters.

Its upbeat outlook also boosted rivals, with Next advancing 57p to 1526p, B&Q owner Kingfisher ahead 67/8p to 1843/4p and Argos firm Home Retail Group 51/4p stronger at 2651/4p.

British Airways was one of the few fallers amid the increased threat of industrial action over the busy summer months.

Its shares declined 3/4p to 124p.

In the FTSE 250, National Express shares slumped 8 per cent, or 251/2p, to 284p, after the company failed to renegotiate its loss-making East Coast rail franchise with the Government, meaning it is likely to walk away from the service by the end of the year.

The company added to its woes by admitting it faced up to £20m in first-half losses on the East Coast franchise, with revenues up by just 1 per cent.

Elsewhere, Cineworld – the UK's second largest cinema chain – rose 51/4p to 148p after saying big screen blockbusters such as Slumdog Millionaire and Transformers were expected to have boosted pro-forma half-year box office revenues by 17.9 per cent.

The biggest Footsie risers were Vedanta, International Power ahead 153/4p to 2533/4p, Antofagasta and Old Mutual ahead 5p to 857/8p.

The biggest Footsie fallers of the session were Man Group down 151/2p to 262p, Lloyds Banking Group declined 15/8p to 681/4p, Pearson fell 8p to 6011/2p and British Airways.