The FTSE 100 index surged back past the 6,100 level to finish at the day's peak as interest rate worries on both sides of the Atlantic eased amid buying of financial, metals and mining stocks.

Speculation of a sizeable merger in the US banking sector also helped boost confidence. Wall Street's overnight recovery, as dealers reflected on news in the US Federal Reserve's beige book indicating there is little sign of a widespread pick-up in inflation, provided the initial cheer that sent the index on its way. Within the first hour, Footsie had surged past 6,100, seen by many chartists as a support level, with strong buying of banking and telecoms stocks. Both sectors have been hit hard in recent sessions. But a broker's favourable note on the banks yesterday combined with speculation suggesting that US banking group Merrill Lynch could merge with its rival Chase Manhattan or an insurance group, to encourage buying.