Shares in London today made small gains against heavy falls suffered earlier this week, following a strong recovery in Asia where the Bank of Japan held interest rates at 0.3 per cent and said it would consider further capital injections.

Last night, the FTSE 100 closed 130.69 lower at 3,874.99 following more grim data from America on job losses and the prospect that one of the country's large carmakers could go bust after the industry failed to agree a rescue deal with Congress.

However, this morning, London shares rose 15.59 points to 3,890.58 led by the miners, with Kazakhmys rising 10.47 per cent to 192p and Xstrata adding 8.4 per cent to 677.5p

The falling yen and hopes of a bounce in US stocks lifted sentiment in Japan and Hong Kong. The growing possibility that Citigroup could merge or sell assets also helped confidence in Japanese financials rise, on hopes it could reduce volatility in the markets.

Sumitomo Mitsui Financial Group gained 8.4 per cent while Mizuho Financial Group surged by 13.9 per cent

Following a volatile day of trading, Tokyo's leading Nikkei index ended 207.75 points, or 2.7 per cent higher while in Hong Kong, the Hang Seng finished up 5.3 per cent at 12,953.42 after opening nearly 4 per cent lower.

A number of Japan's largest exporters, including Sony, the electronics and entertainment giant, gained after the yen fell back, declining from a 13-year high against the pound. At the same time, the dollar was up 1.3 per cent against the yen at Y94.90.

Masaaki Shirakawa, Governor of the Bank of Japan, said earlier this month that further interest rate cuts could cause banks to curtail lending and chill money markets, indicating that interest rates are unlikely to fall to zero in Japan again soon.

Last night, the broader-based S&P 500, which has halved in a year, fell 6.7 per cent at 752.44, its lowest close since April 1997.

The Dow Jones industrial average plummeted 5.6 per cent, or 444.99 points, to end a brutal trading session at a five and a half-year low of 7,552.29.

Traders across Asia are betting that the US stock market will recover today, despite more grim economic data and the failure of the country's biggest carmakers to agree a bailout deal with Congress.

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