THE London equity market's blue-chip index sank below 5000 points yesterday before bouncing back on expectations policymakers would take further action to ease the eurozone debt crisis, writes Douglas Hamilton.

Traders said dealing was highly volatile with stocks see-sawing between gains and losses. The UK’s FTSE-100 benchmark index closed 25.2 points, or 0.5%, stronger at 5066.81. The barometer of top shares dropped as low as 4928.14 before rallying later in the session. It lost 5.6%, or £78 billion, of its value this week, the second-worst weekly fall this year.

The Paris Bourse’s CAC-40 index finished 1.02% higher and the Frankfurt DAX ended the day up 0.63%.

Wall Street stocks moved higher on talk the European Central Bank might add liquidity to shore up the region’s vulnerable banking system, but worries about a global recession kept US markets volatile. New York stocks fell sharply on Thursday.

Earlier, markets were unnerved after Deutsche Bank said European banks may face a bigger-than-expected hit from a swap deal on Greek government debt. Picture: Reuters