The FTSE 100 Index has clawed back some ground after Thursday's near-6 per cent slump, closing 114.7 points higher at 4387.1.

British Airways shares took off as the firm said it still expected to turn a profit in the current financial year despite bleak industry conditions.

The news restored City confidence and investors piled into the stock after BA's half-year operating profits of £140 million, sending the airline more than 12 per cent, or 15.5p, higher at 146p.

Crude oil was steady at $61 dollars a barrel after a $4 fall in the previous session. But investors decided several blue-chip stocks were looking cheap and piled into heavyweights such as BP, 22p better off at 515p, and BG Group, which was up 41.5p to 979.5p.

Many banks also rose early in the session but gave up some of the advance as lenders lined up to pass on the Bank of England's mammoth 1.5 per cent rate cut.

Royal Bank of Scotland shed earlier gains to finish unchanged at 64p, although Halifax Bank of Scotland added 0.75p to 104.25p. Lloyds TSB cheered 12.9p to 200.5p.

The dramatic rates move continued to boost housebuilders and retailers, with fashion chain Next ahead 34p at 1166p and B&Q owner Kingfisher up 3.5p to 126p.

Winners: British Airways up 15.5p at 146p, Autonomy ahead 66.5p at 979.5p, Lloyds TSB up 12.9p at 200.5p and Kazakhmys ahead 18.25p at 323.25p.

Losers: 3i down 35p at 480p, Petrofac off 21.75p at 379p, Liberty International down 37.5p at 655p and Icap, which finished 14.75p off at 313.5p.

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