Shares in HBOS and Lloyds TSB staged a late rally fuelling speculation the buyout deal is back on track.
HBOS stocks closed at 148.1 having advanced 25.7p, or 21%, while shares in Lloyds have reached 250p after climbing 10%. The rally helped the blue-chip index finish 57.14 points, or 1.17%, up to 4,959.59.
Lonmin continued a miserable day following the collapse of a takeover bid from Xstrata. It finished more than 20% down on £18.15 but it has since emerged that Xstrata has increased its stake in Lonmin.
In New York, the Dow Jones has fallen more than 120 points in early trading to drop to 10,730.63.
The fall is despite significant gains for AIG, up 0.59 points, or 17.72%, to 3.92 points and Citigroup, which has advanced to 22.24 after climbing 8.43%.IFAonline
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