FTSE higher amid European debt hope

Barclays shares have surged 9% after a rise in half-year profits helped offset some of the damage caused by the Libor rate-rigging scandal.

The beleaguered lender had lost more than 20% of its value in the wake of the scandal but the robust performance of its investment banking arm and an improvement in return on equity were met with relief by investors.

The FTSE 100 Index surged nearly 1%, or 54.1 points, to 5627.2 as it built on Thursday's strong gains when defiant comments from ECB president Mario Draghi sparked hopes that European leaders will move to lower Spanish and Italian borrowing costs.

There was also comfort from US GDP, which at 1.5% for the second quarter was slightly better than Wall Street forecasts. The Dow Jones Industrial Average was up 0.8% as the London market closed, while Germany's Dax and France's Cac40 lifted 1.6% and 2.3% respectively.

The pound had been at a four-year high against the euro but slipped backwards to 1.27 after the single currency was boosted by the continued hope of ECB action. But sterling was up at 1.57 against the dollar.

Back in London, Barclays was the biggest blue-chip riser despite revealing that four present and past senior staff, including current group finance director Chris Lucas, were subject to a new investigation by UK regulators relating to fees paid under fundraising deals made in 2008. Shares climbed 13.4p to 167p.

Other banks followed it higher, with Lloyds up 4%, or 1.1p at 30.2p, and Royal Bank of Scotland ahead 6.6p at 214.5p.

The risers board also featured further gains for ITV and BSkyB after the broadcasters impressed the City with results on Thursday. Shares were 2.4p and 8.5p higher at 78.2p and 715p respectively after rising 6% and 3% on Thursday.

In other corporate results, bookmaker William Hill was 20.7p higher at 311.1p after reporting a 13% rise in pre-tax profits to £143.3 million. Mobile phone betting has boosted the firm and continues to outperform its expectations.

And Carphone Warehouse jumped 6% or 7p to 131p after a 2% fall in like-for-like sales for the three months to the end of June came in better than the 6% or 7% fall predicted by City analysts.