Banks and insurers were enjoying some healthy rises – including Barclays up 7 per cent – helping to power the index 2 per cent higher as it surfed upwards on a strong opening for Wall Street.

The Footsie closed up 101.45 points at 5197.02, with even more impressive gains being held back as miners declined alongside metals prices.

President Bush's pleas on Wednesday night for urgent action on the 700 billion US dollar (£380bn) plan appeared to have renewed hope among investors that politicians may be closer to agreement.

Barclays was the Footsie's best performing bank, up 241/2p to 370p, with Royal Bank of Scotland not far behind, up 101/2p to stand at 2201/2p.

HBoS gained 31/2p to 184p, and its acquirer Lloyds TSB was also in the black despite a downgrade from broker Deutsche Bank. Shares added 61/4p to 2731/4p.

But second-tier stock Bradford & Bingley, which announced plans to cut 370 jobs yesterday, fell amid concerns over rising interbank lending rates.

The bulk of the job losses will come with the closure of the firm's mortgage processing centre.

Shares sank 15 per cent, or 33/4p, to 211/4p, although the decline largely came before the bank's job cuts were revealed.

Insurers provided many of the best-performing blue chips, with the sector buoyed by some positive comments from the boss of European insurance titan Axa.

More Than owner RSA Insurance was up 157/8p to 1593/8p, followed by Norwich Union owner Aviva, up 483/4p to 540p. Car insurance specialist Admiral also moved ahead, adding 53p to 1010p.

A downgrade from broker Investec left holiday company Thomas Cook under a cloud, as its shares slipped 4 per cent, or 9p, to 2141/2p. Rival TUI Travel escaped the damage after being identified as Investec's pick of the sector, causing its shares to rise 12p to 218p.

The likes of BG Group and Cairn Energy were also on weaker ground as oil prices eased back slightly. BG slipped 17p to 1128p, with Cairn 35p lower to finish
at 2284p.

Retailers were also on the back foot after reports that evidence of firms sharing price information has come to light during an Office of Fair Trading investigation into alleged competition law breaches with the sector. Tesco fell 91/4p to 373p, and Marks & Spencer 31/4p to 228p.

FTSE 250 broadcaster ITV was on better ground after watchdog Ofcom indicated it may reduce the broadcaster's public service obligations. Shares ended 11/4p higher at 431/2p – a rise of 3 per cent.

The Footsie's four biggest risers were Old Mutual, up 93/4p to 873/4p, RSA Insurance, Aviva, and Legal & General, which ended the session 93/4p up at 1093/4p.

The four biggest fallers were Eurasian Natural Resources, down 40p to 595p, Man Group off 251/4p to 3823/4p, London Stock Exchange down 481/2p to 834p, and carrier British Airways which finished the day 83/4p lower at 1983/4p.