A WALL STREET bounce helped London's leading shares index recover from a poor start to post a second session in a row of modest gains.

The FTSE 100 Index climbed 26.4 points to 6392.7 despite early trading being hit by falling oil prices and more worries about the health of the eurozone economy.

In New York, the Dow Jones Industrial Average was ahead as bullish investors digested corporate earnings reports, including better-than-expected results from banking giant Citigroup.

Improved sentiment across the Atlantic helped stocks on the continent recover from their torpor with German's Dax and France's Cac 40 both posting rises. The gains came despite the latest gloom from Europe as the government in Germany, the continent's largest economy, downgraded its growth estimate this year to 1.2 per cent from 1.8 per cent.

On currency markets, the pound took another pummelling after figures showing a sharper-than-expected fall in inflation to 1.2 per cent in September fuelled expectations that UK interest rates will not rise until next summer. The pound fell a cent against the greenback to nearly 1.59 US dollars and was also lower against the single currency at just under 1.26 euros.

Meanwhile, Brent crude slipped more than 1 per cent to 87 US dollars a barrel after the International Energy Agency cut its forecast for oil demand growth this year by 200,000 barrels a day to 700,000 barrels a day.

The outlook from the Paris-based organisation did little to help the fortunes of two of the London market's biggest stocks as BP fell 5.3p to 426.6p and Royal Dutch Shell slipped 13p to 2256.5p.

However, lower oil prices helped British Airways owner International Airline Group to top the FTSE 100 risers' board with a climb of five per cent.

Brokers at HSBC upgraded the stock, also saying that fears over the effect of the spread of ebola on the group had been overdone. Shares have been falling as the crisis has developed but yesterday climbed 15.5p to 339.6p.

At the opposite end of the top-flight, Burberry topped the fallers' board - after warning that trading conditions were getting tougher as Chinese consumers showed signs of curbing spending. Shares were four per cent or 54p lower at 1425p, even after the luxury goods group reported a 14 per cent rise in underlying sales for the six months to September.

Its small-cap rival Mulberry lost about a quarter of its value at one stage after it said UK sales were hit by a shortage of tourist shoppers in the summer. The shares eventually settled 10 per cent, or 75.5p, lower at 675p after a profits warning.

The FTSE 100's biggest risers were International Airlines Group up 15.5p to 339.6p, Johnson Matthey up 121p to 2876p and ARM Holdings up 31p to 853p. Top fallers were Burberry down 54p to 1425p, Tullow Oil down 11p to 518.5p and BG Group down 15p to 1025p.