FTSE soars to biggest gain in its history

LONDON (Reuters) - The FTSE 100 powered to the biggest daily gain in its 24-year history on Friday as banks surged on a radical U.S. government plan aimed at supporting crisis-hit markets and a ban on short-selling of financial stocks.

The blue chip index closed 431.3 points higher at 5,311.3, up 8.8 percent. the biggest percentage and points gain since its inception in 1984.

Stocks surged globally after news the U.S. government is crafting a bailout to mop up the billions of dollars of toxic mortgage debt still clogging the financial system.

The blue chip index, in which banks are heavily represented, got an extra boost from a temporary ban by the Financial Services Authority on short-selling in 33 financial stocks until January 2009.

In the U.S. the Securities and Exchange Commission said short selling of 799 financial stocks is to be halted in the United States under an emergency order aimed at protecting investors and markets.

"There's a very heavy element of the (short selling ban) pushing the rise," said Richard Hunter, head of UK equities at Hargreaves Lansdown. "If you look at banking stocks ... they are particularly rallying and that's clearly off the back of the short selling ban."

Battered banks bounced back strongly, with the FTSE 350 bank index .FTNMX8350 soaring 20.7 percent.

Barclays (BARC.L), HSBC (HSBA.L), Royal Bank of Scotland (RBS.L) HBOS HBOS.L and Standard Chartered (STAN.L) leapt between 17 and 32 percent.

Lloyds TSB (LLOY.L) gained 20 percent after traders said a 5 percent share placing from the bank, designed to raise over 800 million pounds was fully covered.

FICKLE FINANCIALS

Other financial stocks, which have also been dented by the ongoing financial crises, rebounded sharply as well.

London Stock Exchange (LSE.L) shares were up nearly 15 percent, while ICAP (IAP.L), the world's biggest interdealer broker, jumped 16 percent.

UK insurers also registered strong gains, with Prudential (PRU.L), Old Mutual (OML.L), Standard Life (SL.L) and Aviva (AV.L) rising 10.6 to 23.5 percent, while hedge fund Man Group (EMG.L) gained 16 percent.

Energy stocks rose along with higher crude prices CLc1. BP (BP.L), Royal Dutch Shell (RDSa.L), gas producer BG Group (BG.L), Cairn Energy (CNE.L) and Tullow Oil (TLW.L) were up between 5.5 and 12.3 percent.

In the mining sector, BHP Billiton (BLT.L), Rio Tinto (RIO.L), Anglo American (AAL.L), Xstrata (XTA.L), Vedanta Resources (VED.L) and Antofagasta (ANTO.L) gained 9.9 to 22.2 percent as precious metal prices stayed firm.

Retailers and property shares were also in demand as market sentiment improved. Marks & Spencer (MKS.L), Next (NXT.L), Hammerson (HMSO.L), Land Securities (LAND.L), British Land (BLND.L) and Kingfisher (KGF.L) surged 5.5 to 12.1 percent.

Defensive stocks, which investors tend to unload as risk appetite increases lost ground, with food and household products group Unilever (ULVR.L) down 1 percent, British & American Tobacco (BATS.L) down 1.4 percent.

(Additional reporting by Dominic Lau; Editing by Hans Peters)