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The FTSE 100 rose 1.18 per cent in morning trading after two days of massive losses.

At 8:57 GMT the index stood at 3,553.60 – a rise of 41.51 – but traders are keenly aware of a repeat of yesterday morning's dead cat bounce.

However, there is a hope the FTSE will not sink below 3,500 and spark further sell-offs.

Miners pushed forward the gains this morning, with Xstrata up 7.29 per cent, Rio Tinto gaining 6.67 per cent, Antofagasta climbing 5.66 per cent and Anglo American rising 5.45 per cent.

Standard Chartered rose 7.30 per cent – still benefiting from yesterday's announcement of profit gains.

FSA Insurance was down 1.83 per cent, Rexam fell 1.63 per cent and retailer Kingfisher lost 1.45 per cent.

Optimism came to London, despite the Dow Jones closing last night down 0.55 per cent.

In Europe this morning both the Dax and Cac40 saw gains of over one per cent.

All eyes in London are now on the Bank of England and its interest rates and possible quantitative easing decision tomorrow.

Joshua Raymond, market strategist at City Index, said: "The FTSE opened higher this morning but traders are unconvinced as to whether we can hold onto these gains.

"Nothing has fundamentally changed over the last 24 hours. The same people who sold their holdings last week are not buying new ones this week, yet."

He added investors are using each rally to sell positions rather than take up new ones.

"Traders will watch US ADP employment change figures this afternoon but we are already starting to see the market look ahead towards tomorrow's important BoE decision," Mr Raymond concluded.