The FTSE 100 rose 2.52 per cent today following news the economy failed to grow in the second quarter of 2008.
The index rose 135.40 points to 5,505.60 as slowing growth boosted hopes of an interest rate cut.
The prospect of lower interest rates boosted property and financials along with takeover banter with Liberty International rising 8.00 per cent, Lloyds TSB gained 6.96 per cent and Aviva climbed 6.81 per cent.
HBOS rose 6.25 per cent and British Land was up 6.22 per cent.
Meanwhile the miners suffered.
Eurasian dropped 2.73 per cent, Xstrata fell 1.87 per cent, Antofagasta was down 0.61 per cent, Vedanta Resources slipped 0.55 per cent, and Tullow Oil lost 0.38 per cent.
Tim Hughes, head of sales trading at IG Index, said: "Despite recent losses caused by the ongoing problems with global credit markets, big UK banks including Barclays, RBS, Lloyds TSB, HBOS and HSBC made gains on the back of takeover activity in the sector.
"With Wall Street opening higher following a dip in oil prices and speculation that Lehman Brothers may be sold, the FTSE seems on course to finish the week with a very welcome flourish."
He added: "Despite today's gloomy news that the UK economy has effectively ground to a halt over the last few months, with the worst quarterly performance for 16 years, investors have responded positively at the tail end of the week after much-needed upbeat news from the financial sector.
"Takeover speculation in the banking sector suggests the markets are once again ready for activity, encouraging previously nervous investors, but the start to the coming week will show whether this news will support stocks further or prove to be just another flash in the pan."