A good start... but will it last?

In London, the FTSE 100 index rose 115 points during the day, or 3.3%, to end at 3,602 points.

It meant that blue-chip shares finished a turbulent week 111 points higher than when it opened on Monday morning.

In the US, the Dow Jones index of major companies managed to close up 38 points at 7,859 although news of an emergency summit over the Iraqi crisis dampened enthusiasm.

In Europe, the Paris Cac 40 rose 185 points on Friday to end at 2,740 while in Frankfurt Germany's Dax closed 2% higher at 2,403.

It was the second day of gains after Wednesday's sharp falls, when confidence in equities appeared to collapse.

Investors in Japan had already got Friday off to a positive start, with the Nikkei share index closing up 1.7%.

Rebound

All European indexes closed more than 6% higher on Thursday as traders took advantage of sharp falls the day before.

But analysts warned of continuing volatility as uncertainty over a war in Iraq and the state of the world's economy made for nervous markets.

"It's just very see-saw in terms of shifting expectations," said Kevin Gardner, an equity strategist at Credit Suisse First Boston.

"It's very hard to have any confidence in the short-term outlook."

Bargain hunters

In London, financial stocks led Friday's surge with insurance and banking shares reversing recent losses.

The insurance sector has been hammered in recent weeks as tumbling markets raised fears about the financial strength of the industry.

"The market got very oversold. It got down to levels where there was good value," said Lawrence Peterman, investment director at Eden Group.

"But it won't be convincing to investors unless we can sustain this for four or five days," he added.