London shares today staged a surprise rally after a wave of selling following yesterday's huge rate cut drove the market down nearly 6% last night.

The FTSE 100 index rose 81.02 to 4353.43 despite expectations of another heavy sell-off after losses on Asian financial markets this morning.

British Airways' relative success in steering away from losses set a more upbeat tone to the session, although gains were across sectors ranging from engineering to retail.

Mining stocks were particularly strong gainers, driving up the market due to their heavy weighting on the main share indices.

Some analysts said the Bank of England's dramatic rate cut yesterday was being welcomed now that investors had digested the implications. A further half-point cut from Governor Mervyn King's monetary policy committee is now expected by many economists.

Chris Hossain of ODS Securities said: "This is a watershed day. If we don't see a rally of 200-300 points after a cut in interest rates of 1.5% then we really do have some problems. Today's rally is common sense...There was obvious disappointment at yesterday's reaction but now people have stopped worrying about why we cut 1.5% and instead are looking at the effects of that cut - which have to be positive."

Others said today's rises were merely a sign of investors keen to buy shares that were sold too low yesterday and warned not to read too much into it.

The Footsie move was echoed across the continent, with gains of between 1% and 2% on most bourses.

"We expect the rescue package of governments for the banking system, global rate cuts by central banks and the latest recovery of share prices to have at least trimmed fears," said Commerzbank analyst Ralph Solveen.

South Korea's central bank today cut interest rates for the third time in a month as gloom grips Asian markets.

"Increasingly, the signs point to a deep and synchronised global recession that began last quarter and has gathered momentum," JPMorgan Chase economist Bruce Kasman said.