US Federal Reserve chairman Ben Bernanke has given markets a lift by suggesting the American economy might need another boost to revive its growth prospects.
Analysts said this could mean another tax boost to follow the $100bn (£58bn) sent out in rebate cheques over the summer. But Bernanke's remarks, prepared for a speech to Congress, were also taken as a hint that another US rate cut might on the cards. The Fed meets next week, and his comments gave hope to those expecting a 50-basis point cut.
So Wall Street has jumped 160 points, pulling the FTSE 100 along with it. The UK index is now 143.94 points higher at 4206.95.
With crude prices up 2.5% to more than $71 a barrel on talk that Opec was likely to cut production at its meeting this week, oil companies are among the big gainers. BP is up nearly 9% to 469.5p, while Royal Dutch Shell A shares are up 8.5% to £15.21.
However insurers, apart from Prudential, are still under the cosh. Pru is up 52.5p to 322.5p on talk it would take over AIG's Asian businesses, and would raise money in the market to help fund any deal.
But worries that other insurers might to raise money for other reasons - notably boosting their capital bases - has left their shares lower once more. RSA Insurance is down 9.5p at 110.5p, despite news that chairman John Napier has bought 100,000 shares at 121p each.
Consumer credit group Cattles has jumped 48% to 34.75p - after climbing by as much as 80% earlier. The company's shares were hit last week by financing worries, but today investors seem to have decided the fall was overdone.
Cattles has applied for a banking licence to allow it to take deposits, but no decision by the FSA regulator is expected before the end of the year. The company is hopeful of approval, however, and has the infrastructure in place if it gets the go-ahead. The banking licence has been seen as key to the company's future funding.
