A strong start to trading on Wall Street added to earlier gains as the FTSE 100 Index closed 135.4 points higher.

The main interest of the session involved GDP figures, which were revised to show no growth between April and June - the worst performance for 16 years.

But analysts looked on the bright side of the second quarter figure as it increased the chances that the Bank of England will lower rates from 5%.

Financial firms were further cheered by takeover activity, after insurance broker Benfield attracted a bid from American giant Aon and amid speculation in the United States of a Korean bid for troubled bank Lehman Brothers.

The same rates hope buoyed housebuilders after strong gains seen yesterday in the wake of reassuring comments from Charles Church owner Persimmon.

Taylor Wimpey, which is due to report results next week, gained 3.25p to 45.5p, alongside a further rise for Persimmon of 33p to 360p.

A shortened fallers board was frequented by commodity firms after the price of oil steadied following a gain of EUR5 on Thursday. Cairn Energy, which is also due to post results in the coming days, fell 10p to 2866p.

The biggest Footsie risers were Liberty International up 70p at 945p, Lloyds TSB up 19.5p at 299.5p, Aviva up 32.5p at 509.5p and HBOS up17p at 289p.

The biggest fallers were Eurasian Natural Resources down 29p at 1033p, Xstrata off 59p at 3101p, Antofagasta down 3.5p at 575p and Vedanta Resources off 10p at 1798p

FTSE-100 5505.6 135.4

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