The FTSE 100 Index has reached its highest point for nearly two months, up 73.1 points to 5601.2.

The rise came after the surprise news on the US economy's second-quarter performance prompted a strong start on Wall Street.

US-facing businesses such as heating and plumbing giant Wolseley were among the FTSE's leading performers, up 6 per cent, or 24.5p, to 442p.

Healthy gains for financial stocks also underpinned the wider market's progress, although worries over the impact of tropical storm Gustav on the Gulf of Mexico region saw big-hitters BP and Royal Dutch Shell on the back foot.

In banking, results from French giant Credit Agricole boosted UK rivals by raising hopes the worst of the credit crunch may be over.

Royal Bank of Scotland and Barclays were up 8.25p to 230p and 19.25p to 349.5p respectively.

Insurers also enjoyed a stronger showing, with RSA Insurance up 8.3p to 154.1p on renewed talk of bid interest from Zurich Financial Services.

The leading blue-chip riser, however, was supermarket giant Sainsbury's, which gained almost 8 per cent, or 25.25p to 344p late in the session as vague takeover rumours did the rounds.

Moving the opposite way amid the weather-related fears from the Gulf were Shell, down 2p to 1878p, BP 3.5p lighter at 522.25p and BG Group, which was 7p lower at 1187p.

Winners: Sainsbury's up 25.25p to 344p, Wolseley ahead 24.5p at 442p, Barclays up 19.25p at 349.5p and RSA Insurance ahead 8.3p to 154.1p.

Losers: Kazakhmys down 34p to 1305p, Severn Trent off 30p at 1375p, Eurasian Natural Resources down 22p to 1021p and Cairn Energy off 54p at 2857p.

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