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The FTSE 100 managed to hold firm today – not following losses last night in the US and Asia.

After an initial fall below the 4,000 mark – the index closed up 1.41 per cent to 4,122.86, a rise of 57.37 points.

After a 7.7 per cent drop last night in New York, the Dow Jones was up 2.58 per cent to 8,359.04 to 11:49 EST (16:49 GMT)

Gains were also recorded in Europe.

The Cac 40 was up 2.35 per cent and the Dax rose 3.23 per cent.

In London, the miners maintained their anchor on the index, but gains were helped by an increase in the oil price.

Royal Bank of Scotland headed the increases – gaining 15.51 per cent to 63.30p – while the announcement of merger talks between BA and Qantas saw the British flag carrier rise 11.24 per cent.

Tesco was up 11.08 per cent – as sales growth slowed but shopper numbers increased – while Petrofac and British Land gained 6.76 per cent and 6.69 per cent respectively.

Miner Xstrata dropped 14.07 per cent, Rio Tinto was down 11.23 per cent and Fresnillo fell 7.28 per cent.

South African-based insurer Old Mutual fell 6.97 per cent.

Anthony Grech, market strategist at IG Index, said: "It is starting to look as if Monday's session has triggered a shift in sentiment.

"The last ten days or so had seen weakness bringing the buyers out looking for bargains, but steep dives by the major indices on Monday seems to have once again injected a note of caution into any rallies.

"With the interest-rate decision due on Thursday, all of this could well mean that traders are even more reluctant than usual to hold positions for anything but the shortest period at the moment."