It rose 324,84 points, 8.26 per cent, to 4256.9, adding £77.5billion to Britain’s blue chips.

Global markets also rebounded from their worst week for more than 20 years, as European shares rallied strongly following fresh moves by Germany and France to inject hundreds of billions of euros into the banking system.

The dramatic bank rescue plans sparked recovery in oil and metals prices, fuelling a surge in the value of the UK’s heavyweight oil and mining companies.

However, market strategists warned that, despite yesterday’s relief rally, the equity markets were likely to remain volatile, as impending global recession made investors more averse to risk.

Stuart Thomson, chief economist at Resolution Asset Manage­ment, said: “Market volatility is likely to remain extremely high and any improvement in risk appetite is likely to be tactical rather than structural.”