The UK's leading shares rose 3 percent on Monday as a stellar mining rally helped resuscitate the market after last week's hefty falls. Miners added 38 points to the FTSE 100, excavating themselves in a wider equities rebound. The DJ Stoxx European basic resources stocks lost 8.3 percent in last week's market turbulence.
Antofagasta leapt 10.5 percent to top the index, while an upgrade from UBS helped Kazakhmys soar 10.4 percent. BHP Billiton, Rio Tinto, Anglo American gained between 6.9 and 8.3 percent.
The FTSE 100 index ended up 180.7 points at 6,219 after dropping 3.7 percent on Friday in a global sell-off - its biggest fall in more than four years - on concerns of a credit crunch sparked by the fallout of the US subprime mortgage market. European and US shares also rose. The UK benchmark index lost 3 percent last week.
"We're not going to be out of the woods until the volatility quietens down. As long as there are 160-point up days, there are going to be plenty of 200 point down days," said Jim Wood-Smith, Williams de Broe head of research.
"For the long-term investor, nervous markets are going to be very good because they throw out cheap shares," he added on a positive note. "If you can keep your head and remember to buy on day like Friday rather than the up days, there is money to be made."
Shares in chemical company ICI tacked on 2.8 percent after Dutch rival Akzo Nobel said it had agreed to buy the British company for 670 pence per share, or 8 billion pounds ($16.2 billion). Banking shares rebounded after last week's lashing, with Barclays, Royal Bank of Scotland, HSBC, HBOS and Northern Rock all up between 2.3 and 3.8 percent.
J.P. Morgan said global financial stocks may still suffer a further 10 to 20 percent downside from current levels. "In our view, increasing exposure to financials globally despite significant recent underperformance is a mistake," the investment bank said in a note.
"The real vulnerability for global financials is complacency by management and equity markets that the US asset quality problem is merely a subprime problem and insufficient attention to indirect affects."
The Wall Street Journal said in its online edition that Barclays Global Investors and Goldman Sachs were expected this week to outline the performance of their quantitative equity funds.
It said the performance of Barclays Global Investors' 32 Capital Fund Ltd had been challenging but it had not faced large-scale redemption requests from clients or liquidations of its holdings. Also in the financial sector, Man Group, the world's largest listed hedge fund group, climbed 6.8 percent after slumping 9 percent on Friday. Private equity firm 3i Group added 5.6 percent, also boosted by an upgrade from UBS.
But Standard Life shed 1.2 percent. In the energy sector, BP and Royal Dutch Shell were also in demand, up 2.6 percent and 3.2 percent respectively, as crude prices climbed towards $73 a barrel. Insurer Resolution, which agreed a merger with Friends Provident, advanced 3.4 percent, lifted by weekend reports of possible interest from rivals including reinsurer Swiss Re. Friends added 2.3 percent.
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