Banking stocks helped lift the FTSE 100 this morning as traders were cheered by hopes that Lehman Brothers, the troubled US investment bank, could be saved.

Lehman’s shares moved sharply higher in pre-trading in New York this morning as Bank of America emerged as the most likely candidate to take control of the bank.

In London, Royal Bank of Scotland rose 8.75p to 243p, Barclays gained 8.5p to 347p and HSBC was 2p higher at 885.25p.

Overall, the FTSE 100 advanced 53.9 points to 5372.3, with miners also making healthy gains.

Eurasian Natural Resources led the index, up 55p to 717p, Kazakhmys added 49p to 889.5p and Rio Tinto rose 228p to £43.86 as commodity prices firmed. Copper reached its higher point of the week as dealers grew more optimistic about global demand and some closed short positions.

Travel companies were also added to the upbeat mood as brokers noted that the demise of XL Leisure, the UK’s number three operator, would benefit Thomas Cook, up 15.25p to 250.25p, and TUI Travel, up 12.75p to 234.5p, as consumers opted for the biggest and safest companies.

Wolseley, the plumbing giant, was the index’s heaviest faller, down 15.5p to 450.5p, after analysts at Citigroup downgraded the stock to sell from hold, citing weaker housing conditions in all of the group’s markets and the recent rebound in its share price.

Retailers suffered for the second consecutive day, with J Sainsbury down 4.5p to 340.75p and WM Morrison 2.5p lower to 251.25p, as the gloom over consumer spending persisted.

In the FTSE 250, Go-Ahead rose 100p to £19.31, after analysts at Goldman Sachs reiterated their buy recommendation on the stock and raised its target price, citing strong margins in the group’s UK bus business despite higher fuel bills.

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