Mediaboss Marketing

The FTSE 100 surged early on Monday, squeezed higher after euro zone finance ministers agreed to lend Spain up to $125 billion to help its battered banks and Chinese trade data outperformed weak expectations.

By 0755 GMT, London's blue chip index <.FTSE> rose 83.44 points, or 1.5 percent to 5,518.52, having closed cautiously lower on Friday after a two-day rally as investors awaited the announcement from Spain.

Banks <.FTNMX8350> climbed 2.1 percent after the amount agreed on Saturday was more than expected and boosted confidence that policymakers would take the necessary steps to shore-up Europe's banking system, although broader worries over the health the euro zone remain.

"Going forward it's great because I can go to Ibiza and relax on holiday and I do not need to take a suitcase of cash out and hopefully I can use the cash machines without worrying, but to be perfectly honest that is all (the bank bailout) means," David Morrison, strategist at GFT Global, said.

Like us on Facebook

Questions linger over whether the amount agreed will be enough with Spain still awaiting the results of an independent banking audit, and how that will impact other indebted nations such as Ireland and in particular Greece, which goes to the polls for the second time this weekend to try to elect a new government.

Traders said although the Spanish bank bailout has reduced risk to the financial sector, sluggish economic growth, key to countries being able to pay down their debts, remains unaddressed.

"Given the increase in its sovereign debt ratios and poor macro backdrop we worry that full bailout by the autumn is still likely... We think the short squeeze will not last beyond a few weeks and would use the bounce as an opportunity to reduce exposure," Mislav Matejka, an analyst at JPMorgan said.

The FTSE 100 was already off its early high of 5,536.27 and is still in bear territory with major resistance seen around the 5,600 level, which is the 61.8 percent retracement of the LTRO rally which began in December.

Equities, however, enjoyed a short squeeze with the UK's benchmark index down 7.9 percent since mid-March, when fears over Spain's ability to meet austerity targets surfaced.

Read more:
FTSE rallies after Spain agrees bank bailout