MARKS & Spencer shares fizzed 10 per cent higher after boss Marc Bolland raised hopes in the City that the chain is finally on the road to recovery.

Mr Bolland highlighted an improving sales trend in womenswear, even though the general merchandise division still registered its 13th quarter in a row of falling sales.

In a session when the FTSE 100 Index rallied 85.2 points to 6539.1 following two days of heavy losses, Marks shares were 39.4p higher at 444.1p.

As well as a 2.3 per cent rise in half-year profits to £268 million, the company also increased its dividend payment to shareholders and said margins had improved due to tighter control of costs and a focus on full-price sales.

Primark rival Associated British Foods, which posted strong profit figures on Tuesday, was up by another six per cent or 159p to 2942p, while supermarkets were also higher after M&S said second quarter underlying sales in food rose 0.2 per cent.

Tesco lifted 3.9p to 175.5p, Sainsbury's improved 5.5p to 247.3p and Morrisons gained 9.1p to 162.4p ahead of a trading update on Thursday.

Ocado was the biggest riser in the FTSE 250 Index as the figures from M&S showed that those trading in the upper end of market have been less affected by the ongoing supermarket price war. Shares rose 13 per cent or 33.5p to 296p.

Elsewhere, the pound was lower against the US dollar at just below 1.60 after more downbeat figures from the UK economy offered another reason for the Bank of England to keep interest rates on hold on Thursday.

The Markit/CIPS services purchasing managers' index (PMI) stood at 56.2, compared to 58.7 in September and the lowest reading since May last year. Other PMI data this week has also highlighted weaker performances in construction and manufacturing.

Markit chief economist Chris Williamson said: "The surveys suggest that the Bank will wait to gauge the full extent of the slowdown before making any decisions on policy."

The pound was higher against the euro at 1.28.

Outside London's top flight, Howden Joinery surged after the kitchens supplier reported good trading in October and said profits for the financial year will be above expectations. Shares rose 28.1p to 371p.

Pub chain JD Wetherspoon moved in the opposite direction after it reported slower sales growth in October following strong trading in August and September. Rising wage and utility bills have also impacted on the company as shares fell by 34p to 798p.

Insurer esure declined seven per cent or 17.5p to 222p after a 7.4 per cent fall in gross written premiums to £149.6 million for the three months to September 30, driven by an 8.8 per cent drop in the motor sector. Blue-chip rival Admiral fell 40p to 1296p.