The London market rebounded this morning from sharp falls yesterday that left it at three-and-a-half year lows.

The FTSE 100 Index was up 88.7 points to 5624.7, buoyed by calmer overnight trading in Asia and a rise of almost one US dollar on Brent Crude to just under 31 US dollars a barrel.

European markets have faced a torrid week of trading, as a rout on banking stocks left heavyweight lenders languishing in the red for much of Monday, Tuesday and Thursday’s sessions.

But there were signs that investors were feeling more positive about the strength of the lenders in the face of a slowdown in global growth, with Barclays up 5 per cent or 8p to 155.6p, while Standard Chartered leapt 7.5 per cent or 29p to 416.4p.

Germany’s Dax was up more than 1 per cent, while the Cac 40 in France grew just under 1 per cent after sharp losses yesterday.

In stocks, engine-maker Rolls-Royce saw shares surge more than 11 per cent or 63p to 595p, as its fall in profit was better than analysts had expected.

Its annual profits tumbled 12 per cent to £1.4 billion as the business was hit by civil aerospace cuts and falling commodity prices that have impacted output at its marine division, which supplies the oil industry.

It also confirmed it would cut its dividend by half to 7.1p a share, as it bids to conserve cash.

PA