FTSE Reverses Early Fall Despite Euro Fears

London's FTSE 100 closed slightly higher after another unsettled day, which saw investors weigh up reports of a new eurozone rescue plan.

The share index opened 1.7% down, had bounced back to a gain of over 1% by lunch time, and ended the day up 0.45% at 5089.

Miners were the biggest fallers, while banks - which have taken a battering in recent days - were among the companies seeing the biggest gains in their share prices.

There was a stronger rally in Europe, with Germany's DAX rising 2.9% and France's CAC gaining 1.8%.

"Investors have been given a bit of a confidence boost that the financial powers are now acting more and talking less to combat contagion and a lack of liquidity within the eurozone," commented Joshua Raymond at City Index.

The stock market gains came following reports from Washington of plans for a three trillion-euro bailout scheme.

Talks between G20 finance ministers are understood to have concluded that Athens would be allowed to default on up to half of its debts.

They are expected to unveil a plan to rescue the European single currency within days.

The plan is believed to involve beefing up the European Financial Stability Facility (EFSF) and an injection of funds into a number of continental banks.

This would lead to an orderly default by Greece but allow the country to remain within the eurozone in a bid to relieve some of the economic pressure on Spain and Italy.

After Saturday's meeting the IMF sought to reassure markets, with managing director Christine Lagarde saying there had been a "common diagnosis and a shared sense of common purpose".

"There was a dialogue and there was a clear response," she told a news conference.

The situation remained "precarious" however, the IMF noted, and suggested that it may not have the funds to bail out larger eurozone economies if the crisis is allowed to spread.

Chancellor George Osborne warned that decisive action was required within six weeks, saying the world had reached a "dangerous phase" amid fears of a renewed recession.

He said he was "optimistic" however that the gathering of colleagues from the G20 nations and a meeting of the International Monetary Fund (IMF) had made progress.

Meanwhile, President Barack Obama, speaking in California, said the debt crisis in Europe is "scaring the world".

He criticised the eurozone, saying member countries "haven't been as quick as they need to be".

President Obama said Europe never fully healed from the financial crisis in 2007, and that Europe's troubles have spilled beyond the continent and are affecting the US economy as well.

More on the economic crisis:

:: Will Eurozone Rescue Plan Halt Debt Crisis?

:: Live Blog: Global Stock Market Watch

:: Live Chat Replay: Eurozone Crisis Q&A