Around £17.5bn was added to the value of top British firms as shares surged on renewed hopes that interest rates would fall again soon.

The CBI said a 0.5% cut on November 5 - the next meeting of the Bank of England rate setting committee - was the only way to avoid outright recession next year.

Further optimism sprung from news of Italy's decision to cut rates by a full percentage point, reinforcing hopes of a reduction by the Bank Of England.

The FTSE 100 Index of top shares ended the day up 99.7 points at 5331.2, despite a mixed set of performances on other markets around the world.

At one point it stood up 140.6 points at 5372.1.

A busy day of corporate news saw some major moves. Insurance company Norwich Union announced 600 jobs would be lost as part of a deal to buy rival insurance group London & Edinburgh for £315m.

Dealers baulked at the price, sending shares down sharply by 7p to 430p.

Mixed sales figures for the nine months to September and a warning that the strong pound would hit profits dragged drugs group Zeneca down 127p to £22.10 - a fall of nearly 6%.

The group was the session's second-biggest faller.

The news failed to spook Glaxo Wellcome investors who saw shares rise 41p to £18.40.

British Aerospace jumped 35p to 426p on the back an announcement yesterday that it had set up innovative insurance programme to ring-fence potential future financial problems in the regional aircraft market.

Shares in spirits and pubs group Allied Domecq leapt 49p to 520p after it brushed aside worries of economic turmoil, the strength of the pound and poor summer trading.

It promised full-year results ahead of earlier expectations. British American Tobacco spluttered down 28.5p to 478p as disposals, reorganisation costs and currency disruptions burnt a hole in its nine-months profits, causing them to fall by 5%.

Despite the gloom surrounding the retail sector, Debenhams shot up 25p to 367p after the department store reported a 16% rise in its full year profits.

The company also announced plans to open two new stores, creating 450 new jobs by 2001.

Property company Slough Estates raised its hostile offer for Bilton to 313.51p per share, compared to its previous offer of 290p a share.

Bilton, which swiftly rejected the offer, lifted 3p to 303.5p. Slough dropped 2p to 280p.

The Abbey National said more borrowers were falling behind with their mortgages. The former building society, now a bank, noted a rise in the number of mortgages in arrears - including an increase in the number of people more than six months behind in their repayments.

But a trading statement which was more encouraging in other respects helped its shares up 11p to £11.51.

Satellite broadcaster BSkyB up 6.5p to 477p, said it now controlled nearly 45% of Manchester United, bringing it closer to clearing the first hurdle in the battle for the club.