London rallies as Greece's call for aid lifts sentiment

European markets were given a boost after Greek officials said they would make use of a eurozone rescue package, while sentiment was further helped by strong housing figures from the United States.

The FTSE 100 Index closed up one per cent – or 58.32 points at 5723.65 – despite official estimates showing UK gross domestic product rose by only 0.2 per cent in the first quarter, compared to predictions of a 0.4 per cent expansion.

Wall Street also swung into positive territory, even though it started the day weighed down by mixed earnings and economic reports.

The United States Commerce Department said orders for durable goods fell unexpectedly last month, while Microsoft and the US insurance firm Travelers both reported disappointing results.

But news that sales of new homes jumped 27 per cent in March – the best month since July and the biggest monthly increase in 47 years – gave shares a boost.

Stocks across Europe enjoyed a better end to a volatile week, with Greece's move to ask the European Union and International Monetary Fund for support helping the Cac 40 in France to climb 0.9 per cent and the Germany's Dax rise 1.5 per cent.

The euro was another beneficiary of Greece's decision, but the pound was under the shadow of the weak growth in Gross Domestic Product. Sterling fell to 1.14 euros.

Banks and miners were among those leading gains on the Footsie, with Royal Bank of Scotland up nearly four per cent or 1.95p to 55.8p, while Lloyds Banking Group added another 2p to 68.48p – firming the taxpayer's paper profit on its stakes in the banks.

Both part-nationalised players were helped by positive broker comment noting a better outlook and the potential for improving credit quality ahead of their first-quarter figures

next week.

Airlines gained as flights returned to normal after the volcanic ash crisis and amid news that the European Commission is considering ways to help carriers who have been struggling to care for their stranded passengers.

British Airways lifted four per cent, or 8.7p to 234.2p.

EasyJet, in the FTSE 250, also recovered early-session losses to post a 81/2p gain to 4961/2p.

But insurers remained in the doldrums for a second day, with Prudential down 41/2p to 541p.

The group, which confirmed plans to list in Hong Kong and Singapore ahead of its mammoth rights issue to fund the 23bn takeover of Asian rival AIA, was joined by Aviva, which fell by 4.8p to 369.2p.

Prudential said it plans to list in Hong Kong on May 11, and also announced a secondary listing on the Singapore stock exchange, where trading is also expected to start on May 11.

Elsewhere, collectibles firm Hornby surged after it revealed it would pay a dividend to shareholders this summer following a better-than-expected finish to its financial year.

Numis Securities increased its profits forecast to 5.7m from 5m, prompting shares in the Airfix and Scalextric owner to race 16 per cent higher with a 19p gain to 137p.

A broker upgrade also helped the Sheffield-based insulation and roofing firm SIG make advances in the second tier, up 71/2p to 137.8p.

The biggest Footsie risers of the session were Carnival up 158p at 2850p and Wolseley ahead 85p at 1658p.