FTSE recovers on mining rebound

Shares in London rose on Tuesday thanks to a rebound in the mining sector.

Banks added their weight after an upbeat trading update from Alliance & Leicester, the mortgage lender.

The FTSE 100 closed 96.3 points, or 1.7 per cent, higher at 5,885.2 while the FTSE 250 rose 264.9 points, or 2.8 per cent, to 9,905.4.

Wall Street markets offered a measure of support in steady morning trade. The Dow Jones Industrial Average was 0.6 per cent stronger at 12,454.2, with the broader-based S&P 500 also up 0.5 per cent to 1,360.6.

As the Federal Reserve started its interest rate meeting, dealers remained hopeful of a further cut of at least 50 basis points. The central bank last week slashed the federal funds rate by 75bp to 3.5 per cent, its biggest cut for 25 years.

Gold and platinum prices broke new ground for the third consecutive session, with spot platinum reached $1.735 per troy ounce and February Comex gold futures touching $930. Silver moved to a 27-year highs at $16.76.

The mining sector remained volatile, with Kazakhmys rose 4.7 per cent to £11.93, Antofagasta gained 6.7 per cent to 669½p and Anglo American gained 5.8 per cent to £26.08.

Banking stocks added to the improving sentiment after A&L said full-year trading for 2007 looked set to meet expectations. he mortgage lender confirmed it had funded its maturing medium-term wholesale funding, commercial paper and certificates of deposit to the end of 2008.

A&L gave up early gains and slid to the bottom of the FTSE 100, 3.5 per cent down at 700p, other banks gained, with Lloyds TSB up 4.2 per cent to 433.1p and HBOS 2.5 per cent higher at 694½p.

Tui Group lifted tour operators to the top of the blue-chip leaderboard with a strong trading statement, soothing fears about uncertain consumer spending.

Tui insisted its performance remained "strong" and said it expected cost savings from its merger with First Choice Holidays to rise by 50 per cent from original estimates to £150m. Its shares rose as much as 4.2 per cent then fell back to close 0.4 per cent up at 240p. Rival Thomas Cook outflanked it to close 5.5 per cent higher at 260p.

BSkyB shrugged off a ruling that it would have to reduce its 17.9 per cent stake in ITV to a level below 7.5 per cent. The decision would cost BSkyB about £250m at ITV's Monday closing price.

BSkyB was up 3.5 per cent at 549½p whilst ITV rose 2.1 per cent to 73½p.