Shares surge on eurozone bailout ruling

The FTSE 100 index rose more than 3 per cent or 161.75 points to 5,318.59 as relieved investors started buying again.

Michael Hewson, market analyst at CMC Markets, said the court’s ruling did give some cause for concern. But he added: “There have been broad gains across all sectors as stocks have rebounded after getting knocked down to some pretty low levels.”

The Constitutional Court’s rejection of a series of lawsuits aimed at blocking German participation in bailout packages for Greece and other eurozone countries boosted the euro, which rose to €1.13 against the pound, while sterling held steady against the dollar at $1.59.

In Germany, the Dax was up more than 4 per cent, while the French Cac-40 jumped by 3.6 per cent. The Dow Jones industrial average opened more than 150 points ahead as US investors also looked forward to a speech by president Barack Obama later today, when he is expected to outline new measures to boost US employment.

Oil, banking and mining companies led a rejuvenated Footsie with gains of 8 per cent or 85p to 1,171p for Tullow Oil, and 85p to 1,329p for copper miner Antofagasta. Lloyds Banking Group added 2p to 32.7p, while Royal Bank of Scotland rose 1.3p to 22.5p.

Solid performances from retailers on the mid-cap FTSE 250 index also helped sentiment, with trendy fashion chain SuperGroup and the sportswear group Sports Direct International both in demand after good trading figures.

SuperGroup, the owner of the Superdry label, lifted sales by 66 per cent to £54 million in the three months to 31 July. The shares jumped 7 per cent or 69.3p to 1,059p.

Sports Direct, founded and controlled by Newcastle United owner Mike Ashley, rose by 4 per cent as it posted sales of £368m in its retail division in the 13 weeks to 25 July, up 0.8 per cent on a year earlier despite comparatives with the World Cup season. The shares were 9p higher at 219p.

Dixons Retail Group jumped by as much as 9 per cent at one stage after analysts described a trading update from the Currys and PC World owner as reassuring, although it closed flat at 10.6p.

The group reported a 10 per cent fall in same-store sales during the 12 weeks to 23 July in the UK and Ireland, but this was in line with expectations and helped shares in the beleaguered company to initially surge.

Chocolatier Thorntons was another strong performer as investors ignored a restructuring-driven loss of £1.1m to focus on record sales and hopes for recovery.

The group intends to close up to 180 stores over the next three years as it grows sales through the internet and other retailers. Shares rose 5 per cent or 2.25p to 48.25p, but are still half the level seen last November.

Among the Scottish firms, Goals Soccer Centres continued a slide that started on Monday when it warned of softer-than-expected trading. A broker downgrade yesterday helped its shares shed a further 5.8 per cent to 107.25p.