Latest roller-coaster session leaves FTSE 3.1% higher

STOCK markets rallied yesterday as encouraging US jobs data fuelled gains on Wall Street that outweighed anxieties that France might be the next to lose its AAA credit rating.

In London, the FTSE 100 index closed up 155.6 points, or 3.1 per cent, at 5,163 after another roller-coaster day that saw the market open up 150 points, sink 60 points into the red on the French worries, and then recover after Wall Street opened.

The Dow Jones index was up 277 points, or 2.6 per cent, by lunchtime US time after data showing that the number of Americans signing up for unemployment benefits fell last week below 400,000 for the first time in four months.

The news bolstered European markets, giving stocks a respite from worries about eurozone debt. The FTSEEurofirst 300 index closed up 2.6 per cent.

The Frankfurt bourse rose 3.4 per cent, Paris was up 2.9 per cent, Milan 4 per cent and Madrid 3.6 per cent. Sterling was boosted by the better sentiment, rising to $1.63 against the dollar, and holding steady against Europe's currency at €1.14.

Stock market bulls were also encouraged by French banking giant Societe Generale denying rumours it had problems. One dealer said: "A better day, but nobody is saying we are out of the woods.

"One decent piece of American economic data hasn't changed an underlying mood of nervousness."