Footsie and pound surge but all eyes on rate call in US

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

The FTSE 100 index was up 263.8 points, or 6.7%, at 4190.2, with insurers, banks and miners leading the charge after weeks of heavy losses. Sterling jumped almost seven cents against the greenback, putting it on course for the biggest two-day rise in more than 23 years.

The pound was up 6.9 cents to $1.628 on speculation the rally on the stock market will bolster demand for the British currency. The Footsie took its lead from strong gains in Asia this morning and a dramatic rally last night in New York, where the Dow Jones Industrial Average surged 11% in its second-best session on record.

It came on hopes a rate cut by the US Federal Reserve tonight would be followed by similar moves in Britain, Europe and Asia in the coming days.

"Sentiment has turned around on hopes of rate cuts around the world," said Mark Outten, a dealer at GFT Global Markets.

But the Dow was down 24.93 at 9040.19 ahead of the Fed decision and analysts warned the rally in the pound and stock markets could be short-lived as the US, Britain and the global economy enter recession.

John Higgins of Capital Economics said: "The bounce in sterling from its recent trough does not mean the UK currency is off the hook. We continue to expect the pound to drop to $1.50 by early next year."

The Footsie is still down more than 2500 points, or almost 40%, on a year ago. Analysts warned the volatility was set to continue as the fallout from the financial crisis continued.

Andrew Turnbull of ODL Securities said: "As ever, we must remain cautious and whilst many of us in the industry would love to treat this as a turning point in the markets, such hopes could be naive considering the bleak outlook for our over-leveraged net-importing economy."

David Buik of BGC Partners said: "Make no mistake, the credit crisis is only just starting and the recession is just about under way. It seems inconceivable that equities will not be subjected to further vagaries and a very uncomfortable ride."