High Street banks were the destination of choice today, with Barclays ahead by 9p to 109p as an upgrade from Credit Suisse, combined with historically low interest rates, raised hopes the sector is finally climbing back from rock bottom.

News of a further 600,000 job losses in the US failed to reverse market gains, with many arguing that the worsening American economic picture will simply increase the pressure on the new Obama government to take decisive action.

In London, support for banking, mining and retail shares saw the FTSE 100 index climb 67.24 points to 4296.17. Mid-cap stocks also found favour with the FTSE 250 up 187.73 points at 6578.88.

In New York, the Dow gained 131.42 points at 8194.49.

Credit Suisse, which raised the UK banks to benchmark, focused on their relative cheapness with shares changing hands at an average of just 1.8 times profits and 0.4 times book value.

More importantly, CS reckons further nationalisations are unlikely. It argues that buying the banks would not be in Gordon Brown's interest because it could be politically embarrassing, add massively to debt and be hard to manage.

Fear of Government intervention has been one of the major factors affecting the banks. CS has halved its target for Barclays to £1 but acknowledges that greater clarity on Government action could lift the shares.

Lloyds Banking was ahead 8.4p at 109p while RBS shrugged off the furore over bonuses to climb 2.9p to 24.9p.

The interest-rate cut helped retailers, which shrugged off a deeper fall in sales at John Lewis to notch up modest gains.

Marks & Spencer rose 12.2p at 267.5p while Next was 38p ahead at 1206p. Eyes were also on cash-strapped Rio Tinto, with the market concerned that a major rights issue is on the way. Rio has sworn to reduce its debt mountain through asset sales and cost-cutting, but it is running out of time.

However, some relief arrived today as it emerged it is in talks that could see it hive off part of its Alcan packaging business, said to be worth $5 billion (£3.4 billion), to Amcor, the world's largest maker of plastic drinks bottles.

Rio climbed 126p to 1962, and other miners benefited from suggestions that business is picking up in the mining sector.

Traders have noticed that the Baltic Dry Index, which measures shipping activity, has gone up 30% in the past few days — meaning more ships are unloading coal, iron ore and the like. Vedanta was up 39.5p at 653.5p while Xstrata rose 55p to 812p.

A fortnight's sunshine could be seen as a vital antidote to the gloomy outlook, or an easy way for households to slash an unnecessary item from straitened budgets.

Package holidays operator Tui's optimistic outlook has not convinced everyone. Citigroup has gone cold on the group, shunting it down to hold from buy and trimming its target to 230p from 240p on the back of the deteriorating environment.

But despite its caution, it concedes there is potential for improving margins if Tui, down 8.5p at 251p, can renegotiate accommodation contracts and cut even more capacity. It prefers Thomas Cook, keeping it at buy but lopping the target to 280p from 305p.

Dana Petroleum soared 48p to 9631/2p as it revealed it last year increased output by almost 10,000 barrels, or 29%.

Proven and probable reserves rocketed 300% to 194 million barrels.
BG Group rose 20p to 1068p as investors bought into its growth prospects.

Deutsche Bank upgraded it to buy from hold, claiming: “These were truly excellent results!” Deutsche is impressed by growth opportunities in Brazil and Australia, and has upped his target to 1175p from 1075p.

A dash of Friday froth came in the shape of rumours of a bid for Coffeeheaven International from Whitbread. Coffeeheaven leapt 10% to 16p despite the story being a rehash of earlier whispers.

Said one trader: “It would be cheaper for Whitbread to take over some of the sites of all the bankrupt retailers than buy a whole company.”