Britain's leading share index rose 1.5 percent on Friday, lifted by US President George W. Bush's plans to tackle the subprime mortgage crisis, which has plagued global financial markets for the past two months. The FTSE 100 was up 91.3 points at 6,303.3, for a weekly gain of 1.3 percent.
The UK benchmark index lost 0.9 percent for the month on concerns over the extent of the fallout from the crisis in the risky US subprime lending sector, but is still up 1.3 percent for the year. Bush unveiled plans for the government to help some struggling subprime mortgage borrowers avoid foreclosure, but said it is not the government's job to bail out speculators.
"The market is a bit more confident that various institutions will act in order to prevent the housing crisis getting any worse," said Neil Parker, market strategist at Royal Bank of Scotland. "It has been a decent recovery but let's not count our chickens. Volatility will remain very high in the equity markets in the course of the next few weeks."
Commodity shares led the FTSE's advance, adding nearly 30 points to the index, as higher metal prices boosted miners and US crude prices edged towards $74 a barrel. Oil major BP gained 1.2 percent and rival Royal Dutch Shell added 1.4 percent. Gas producer BG Group rose 1.5 percent, also boosted by a UBS upgrade to "buy" from "neutral".
In the mining sector, BHP Billiton, Rio Tinto, Kazakhmys, Anglo American, Vedanta Resources and Lonmin rose 1.7 to 4.4 percent. "There is no further bad news. Both (Federal Reserve Chairman Ben) Bernanke and Bush highlighted there were problems. There are concerns of bigger losses out there by some people but they don't seem to be emerging," a trader said.
"With the lack of concrete news people are going to keep buying the market," he said, adding the FTSE 100 was still 400 points off its peak. Banks were the other top-winning sector, with HBOS, Royal Bank of Scotland, HSBC, Northern Rock, Standard Chartered, Alliance & Leicester and Lloyd TSB all up.
Barclays tacked on 2.7 percent. A source close to the matter said the UK bank turned to the Bank of England as the lender of last resort for the second time this month after a technical breakdown in the UK clearing system.
Barclays declined to confirm it had used the central bank's borrowing facility, but said late on Thursday it saw no liquidity issues in the UK market and was itself "flush with liquidity". Elsewhere in the financial sector, Standard Life was up 3 percent and hedge fund group Man Group climbed 1.5 percent. Rare losers included Home Retail Group and Mitchells & Butlers.