European markets gain over 1%

Joshua Raymond, Market Strategist at City Index commented: "Europe's markets continued their recovery from the Dubai fall out with investors returning to the market with full vigour.

Today has been all about bargain hunting with investors hunting any stocks that had been badly beaten over the Dubai debt fall out.

The markets shrugged off weaker than expected US manufacturing data in the afternoon's session to finish on a high which emphasises that perhaps equities had been aggressively oversold.

The plans announced overnight from Dubai World to restructure its debt has calmed many investors who feared that it could create a domino affect of debt hazards to European banks and this has helped to free investors hands somewhat.

It is becoming quickly apparent that last weeks dramatic falls, when the FTSE posted its worst loss in 8 months, may have been overdone and investors have firmly switched their attention back to the wider economic recovery.

The miners, banks and energy sectors have all been in high demand today. The miners, benefitting from a weaker US Dollar and renewed appetite for risk has outperformed with Fresnillo and Xstrata leading the gains.

Investors may now switch their attention towards Friday's non Farm payrolls as we begin to gauge the wider economic growth prospects and given today's strong rally, investors may be enticed to take some profits off the table as we run up to the important jobs announcement.

Lloyds Banking Group

Lloyds share prices remained under pressure however, underperforming a stronger banking sector after KBW slashed its price target on its shares to 65p from 105p."