RSA Insurance was one of the top gainers in the blue chip index, ending 15.9p higher at 159.4p, after Henri de Castries, chief executive of AXA, the French insurer that is RSA’s largest shareholder, said on French radio: “The situation today will offer us opportunities to reinforce our positions in the next few months.”

Swiss Re stoked the excitement with better than expected figures and by saying that its Admin Re division, which buys life and health policies that are in run-off “is uniquely placed to seize opportunities arising from the current market situation”. It may look at Old Mutual’s disastrous US life insurance division – run from Bermuda – whose new chief executive is expected to sell it or shut down. Old Mutual, the hardest-hit insurer of recent days, rose 9.8p to 87.8p.

The change in sentiment was helped by the ban on short-selling and by talk that Warren Buffett or the Swedish private equity firm Cevian Capital were increasing their stakes in Munich Re. Aviva rose 48¾p to 540p, Legal & General gained 9.8p at 109.8p and Prudential climbed 45p to 577p.

The FTSE 100 closed up 101.45 at 5,197.02 as word spread from the White House that talks about the US Administration’s $700 billion debt rescue package were nearing agreement.

Ofcom’s plans to cut the amount of news that ITV must broadcast helped to trigger a surge in its shares since there was talk that it would now be more attractive to bidders such as RTL. At first up 4p, the broadcaster ended only 1¼p higher at 43½p since any bidder is likely to wait for the impending Competition Appeal Tribunal ruling on whether BSkyB, up 11¾p to 431¾p, must dispose of some of its ITV stake.

Thomas Cook fell 9p to 214½p after Arcandor, its 53 per cent shareholder in Germany, said that it may seek to raise funds by reducing its stake. Investec said that trading figures next week may disappoint.

Man Group lost another 25¼p at 382¾p ahead of its own figures next Monday. Despite its request, it has not been included on the Financial Services Authority’s list of stocks protected from short-selling. On Wednesday directors said that their trading strategy was not heavily exposed to the short-selling ban, but Numis lowered Man’s target price from 650p to 350p, saying that its flagship AHL fund had lost 18 per cent from its high point.

Johnston Press, the regional newspaper group, fell 2p to 35½p after Daily Mail and General Trust, off 3p to 331½p, unveiled a further dive in its regional newspaper advertising revenue.

Amec fell 15½p to 662p despite Oriel Securities saying that the price had fallen too far because Toscafund had been reducing its 11 per cent stake.

Inchcape, the car dealer, lost ½p to 210¼p after Autologic, which distributes cars to dealers in the UK and the Benelux countries, said that a slump in car sales had worsened since June. Sector-watchers believe UK-wide sales may have fallen at least a fifth in September, a key month in which new registration plates come in. Lookers was down ¼p at 48½p, Vertu flat at 26¾p and Pendragon off 0.18p at 9.7p. Loss-making Autologic fell 5¼p to 30¼p.

New York: US shares soared as investors bet that Congress was close to a deal on a $700 billion financial sector bailout that could help to thaw credit markets and revive lending. The Dow Jones industrial average closed up by 196.90 points at 11,022.10.

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