London - The London stock market rebounded in early trading Thursday, which saw the Financial Times Share Index rise by 3 per cent while banking shares were up again sharply.

The recovery was led by banks expected to tap the government for new capital pledged in a 50-billion-pound (87-billion-dollar) package Wednesday, and boosted by gains on Far Eastern markets as well as the global interest rate cuts.

Shares in Halifax Bank of Scotland (HBOS) were up nearly 30 per cent Thursday, while Royal Bank of Scotland shares rose by 16 per cent.

By mid-morning, the FT-Index was up by more than 3 per cent, or 137 points to 4,503.59, after closing 5 per cent down Wednesday. (dpa)