MORE than £27 billion was added to the value of Britain's blue chips after the Bank of England pushed the button on its first interest rate cut since 2009, but the pound was sent plunging.
The FTSE 100 Index closed 1.6 per cent or 105.8 points higher at 6740.2 as investors welcomed the the Bank's decision to slash rates to a new historic low of 0.25 per cent from 0.5 per cent to ward off recession after the Brexit vote.
The rate cut was widely expected, but the Bank caught many investors off guard by signalling it expects to reduce rates even further - to a "little above zero" - later this year.
It also unveiled a package of measures worth up to £170 billion, described by experts as "sledgehammer" action.
The Bank will re-start quantitative easing, expanding it by £60 billion, launch a £10bn corporate debt buying programme and a new scheme worth up to £100bn to encourage banks to lend.
Sterling tumbled after the announcements, falling 1.5 per cent or 2 cents to 1.31 US dollars, while it dropped 1.3 per cent to just under 1.18 euros.
Connor Campbell, financial analyst at Spreadex said the Bank had "certainly delivered, at least from the market's points of view".
Markets across Europe joined in the rally, with the Cac 40 in France and Germany's Dax both finishing 0.6 per cent higher.
But the Dow Jones Industrial Average on Wall Street was less impressed, hovering around its opening mark at the time of close in London.
Financial stocks and housebuilders were among the biggest gainers in the top flight share index after the Bank's rate cut.
Asian-facing bank Standard Chartered rose 31.7p to 646p and HSBC lifted 12.9p to 517.3p, while Charles Church builder Persimmon was 36p higher at 1672p.
But the prospect of lower rates and a margin hit left Lloyds Banking Group in the red, down 1p at 52p.
Insurers gained sharply, buoyed by strong results coming out of the sector from Aviva and More Than owner RSA Insurance.
Aviva led the session's gains with a 25.8p hike to 410.8p after it posted a 13 per cent rise in operating profit to £1.33 billion in the first half of the year and hiked its dividend by 10 per cent.
RSA lifted 6.8p to 505p following a 20 per cent rise in operating profits to £312 million for the first half of the year and a record 63 per cent rise in underwriting profits to £119 million.
Elsewhere, retailer Pets at Home raced nine per cent higher in the FTSE 250 Index - up 21.7p to 260.6p - after it unveiled a pick-up in sales growth, to 2.7 per cent in its first quarter to July 21.
The biggest FTSE 100 risers were Aviva up 25.8p to 410.8p, Standard Chartered ahead 31.7p to 646p, Intu Properties 11.1p higher at 306.1p and Paddy Power Betfair 315p stronger at 8830p.
The biggest FTSE 100 fallers were Hikma Pharmaceuticals down 448p to 2220p, Randgold Resources off 345p to 8635p, Next 140p lower at 5200p and Lloyds Banking Group falling 1p to 52p.
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