FTSE recovers on record metals prices

London equities rose in opening trade on Tuesday, with mining stocks boosted by record prices for gold and platinum.

Banks added their weight to the rebound after an upbeat trading statement from mortgage lender Alliance & Leicester.

The FTSE 100 started the session 0.8 per cent higher at 5,832.6, a rise of 43 points. The FTSE 250 rose 0.9 per cent to 9,725.0, an advance of 85 points.

European markets also made gains, helped by strengthening banking stocks across the continent. Selling in the wake of the trading at Société Générale had left much of the sector looking undervalued.

The FTSE Eurofirst 300 moved 0.7 per cent higher to 1,326.1 with the CAC 40 in Paris 0.8 per cent stronger at 5,886.9 and the Xetra Dax 30 in Frankfurt up 0.7 per cent to 1,326.2.

Gold and platinum prices broke new ground for the third consecutive session as growing hopes for a US rate cut ahead of the US Federal Reserve's meeting this week soothed fears about prospects for global economic growth.

Spot platinum reached $1.735 per troy ounce with February Comex gold futures touching $930. Silver moved to 27-year highs at $16.76.

The news helped miners make fresh gains. Xstrata rose 4 per cent to £36.55, Anglo American was 3.6 per cent higher at £25.55 and Lonmin was 2.9 per cent stronger £29.50.

Banking stocks added to the improving sentiment after A&L said full-year trading for 2007 looked set to meet expectations.

The mortgage lender also confirmed it had funded its maturing medium-term wholesale funding, commercial paper and certificates of deposit to the end of 2008. Its shares rose 1.5 per cent to 736p.

HSBC was 1.2 per cent stronger at 765p, Lloyds TSB was up 1.4 per cent at 428p and Barclays (NYSE:BCS) was 1.1 per cent stronger at 488.3p.

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

Tui said its current performance remained "strong" and that 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 4.2 per cent to 249p. Thomas Cook was 5.5 per cent higher at 260p.

BSkyB shrugged off a ruling that it 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 0.3 per cent at 532½p whilst ITV rose 1.9 per cent to 73.4p.