London shares surge

Rate cuts topped the City of London agenda

London's stock market, revived by a cut in US interest rates, shook off midday concerns to put in a strong finish on Thursday.

The benchmark FTSE 100 stock index, which has fallen heavily in recent weeks, ended the day 2.4% higher at 6,185.6, with shares in technology firms leading the charge

The rise followed surges in stock markets worldwide following the surprise cut in US interest rates on Wednesday.

London's leading shares

Colt Telecom: +18.2%

Energis: +12.9%

Sage Group: +12.4%

Misys: +12.3%

WPP: +11.8%

US stock markets were among the chief gainers on Wednesday, with the tech-heavy Nasdaq recording a 14% gain, its largest ever rise in a day.

While London shares eased in lunchtime trade on Thursday, over concerns that US equities would give up their gains when Wall Street markets opened for business, the City's fears proved unfounded.

Although the FTSE 100 failed to regain a high reached in the opening minutes of trading, the index more than recovered the 134 points it lost on Wednesday.

Shares in Colt Telecom headed the leader board, rising 18% over the day, with BT and Vodafone also popular among investors.

Recession fears

The decision by the US Federal Reserve to cut rates by 0.5% followed a string of disappointing economic figures, raising fears that the country's economy - the world's biggest - might slip into recession.

The time is right now for the governor of the Bank of England and his colleagues to be as bold as Mr Greenspan in the States

John Monks, general secretary, TUC

The decision raised the prospect of reciprocal action elsewhere, with union leaders heading calls for rate cuts in the UK.

TUC general secretary John Monks urged the bank to take Alan Greenspan, chairman of the Federal Reserve, as an example.

"We have got slowing growth in employment, our inflation is low and yet our interest rates are higher than in euroland, " Mr Monks told BBC Radio 4's Today programme.

"I think the time is right now for the governor of the Bank of England and his colleagues to be as bold as Mr Greenspan in the States.

"Although we are not in recession in this country, as far as manufacturing is concerned things are grim and two out of three workers in manufacturing are working in factories where output is falling."

Economists slammed

John Edmonds, general secretary of the GMB general union, said: "Alan Greenspan manages the US economy as if he were handling a high-performance racing car.

US finance chief Alan Greenspan: praised by UK union leaders

The Bank of England economists who set interest rates were "like the crew of a supertanker on their final journey, admiring the view whilst their vessel heads inexorably to the rocks", he added.

But the bank's deputy governor Mervyn King attempted to dampen hopes of an early cut, saying: "We set interest rates for the UK, not the US."

The bank's rate setting Monetary Policy Committee meets next week.