Hopes that interest rates would be cut again pushed London blue chip shares to finish the week up by 4.2%.

The FTSE 100 rallied 79,9 points to close trade at 5438.4, a rise of 1.5%.

At midday on thin volume as the market holds onto early gains made on the strength of key overseas markets.

The benchmark index was also encouraged by Wall Street's 123-point overnight advance and gains in most Asian markets.

Traders said attention was focused on next weeks' crucial domestic events: Chancellor Gordon Brown's pre-Budget statement next Tuesday and the Bank of England's interest rate announcement on Thursday.

Leading stocks were further underpinned by a G7 proposal to shore up the global financial system.

Talk of consolidation in the chemicals sector lifted ICI 8% while British Airways benefited from talk - denied by the company - that it is to water down its alliance plans with American Airlines in the face of regulatory intransigence.

AB Food was among the bigger losers ahead of full year results on Monday. Concerns about the impact of a strong pound, a squeeze on margins and worries about how a £1.5bn cash pile might be used all added to the group's woes.

BSkyB, meanwhile, edged back on the cost of launching its digital services.

The company, which is planning to take on 1,700 staff to cope with digital, rose at first but endured a bumpy ride. In the end it finished up 2p at 487p.