Shares in London soared by nearly 145 points in early trading today as hopes grew that new measures to stimulate the global economy will emerge at this weekend's G20 summit of the world's largest industrial and emerging market economies.

The FTSE 100 index rose 144.8 points to 4,314.03 today, supported by a surprise rally on Wall Street last night, with the Dow Jones industrial average ending the day over 500 points higher.

Despite the buoyancy on the market, fears of recession continued to weigh on the pound. Trade-weighted sterling hit a 13-year low, and it fell to a record low of 86.23 pence against the euro.

Asia also benefitted from optimism ahead of the Washington summit.

Investors in Tokyo said that the likely outcome of the summit talks in Washington was opaque, but that the balance appeared to be shifting towards an announcement of the kind of market-stimulating measures that would play well come Monday.

Early Tokyo trading saw spectacular gains for the Nikkei 225 Index, which surged more than 500 points as a massive short-squeeze propelled shares higher.

Automakers and exporters were all in better shape than they had been earlier in the week, but the entire market was pushed higher by yet more declines for the yen.

Also pushing Japanese shares upwards was data from the Tokyo Stock Exchange itself, which suggested that, in recent weeks, the Japanese themselves have turned buyers of their own market.

Until now, the great majority of the volume shifted across Tokyo dealing floors in recent weeks has been buying and selling by foreign funds. Domestic investors had previously remained on the sidelines, but now appear ready to think of Japanese stocks as bargains.

As the Tokyo session wore on, however, the euphoria evaporated somewhat as investors began to factor-in the likely showing from the US October retail sales numbers.

The figures are expected later today, and could offer hard evidence that the fears for the health of electronic makers, automakers and other Asian manufacturers are well founded. Shares ended the day 2.7 per cent higher.

Hong Kong shares were also around 3 per cent higher on Friday as the rising oil price provided a useful boost to the energy companies listed on that exchange.

The strong showing for Hong Kong shares was amplified by a general feeling – described as “crazy” by some market players – that the market has been heavily oversold this week and is due for a relief rally.

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