FTSE 100 closes higher

Tuesday, 28 October 2008 12:00

The FTSE 100 rallied in afternoon trading to close 2.34 per cent higher but remained under the 4,000 barrier.

Closing at 3,942.84, the index stayed clear of Monday's five-and-a-half year low of 3,665.21 but analysts were unsure whether the rally is the start of a recovery or a 'dead cat bounce'.

David Jones, chief market strategist at IG Index, said: "The puzzle for investors is how much future bad news is already being factored in by financial markets. For the past 12 months, rallies have ultimately proved to be relatively short lived - and almost non-existent since September.

"Despite a rare but welcome positive day today, opinion is still leaning towards this being yet another dead cat bounce before the next move lower.

"At the moment it is going to take a move well above 4,000 to suggest we are anywhere near to getting out of the woods - the risk remains for another trip down to fresh lows before too long."

Insurer Admiral Group led the index higher, with a 14 per cent rise in shares, while HBOS also rose by 10.33 per cent.

BP, which reported a 148 per cent rise in profits today, saw its shares rise by 5.37 per cent.

Several financial stocks were headed down on the index, with Prudential falling 10.22 per cent and Legal and General down by nine per cent.

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