Banks and commods give FTSE 4.8 percent lift

By Michael Taylor

LONDON (Reuters) - The FTSE 100 .FTSE index of leading shares ended 4.8 percent higher on Thursday, led by banks, as the U.S. made moves to halt concerns over the health of its economy.

The blue-chip index climbed 266.5 points to 5,875.8, having hit a session high of 5,882.3.

Across the Atlantic, U.S. stocks were choppy despite the White House's optimism that an economic stimulus package would be reached with Congress soon.

This followed on from news on Wednesday that New York's insurance regulator pressed major banks to put up billions of dollars to rescue ailing bond insurers.

"It's a dead-cat bounce," said Stuart Fraser, investment director at Brewin Dolphin. "We feel that there is still quite a long way to go before we can be relatively confident that we've seen the worst."

"We are getting very substantial daily moves. A lot of it will be driven by the futures market, and I don't think it really reflects underlying investor sentiment either one way or another."

Stocks tumbled 5.5 percent on Monday -- the largest one-day loss since September 11, 2001 -- wiping nearly 77 billion pounds from the value of the index's constituent stocks, on concerns over a U.S. recession.

Banks were one of the biggest sectoral gainers on the FTSE 100 on Thursday, despite French bank Societe Generale (SOGN.PA) revealing that an employee had cost it 4.9 billion euros (3.7 billion pounds) through fraudulent trades.