THE London market surged more than one per cent yesterday as investors regained their appetite for risk amid hopes that Greece will avoid a debt default by agreeing to tough austerity measures.

There was optimism that the Greek government would last night win a confidence vote, which would pave the way for the country to implement the unpopular cost-cutting measures it needs to stay afloat.

This helped the FTSE 100 Index climb 81.9 points to 5775.3, while the Dow Jones Industrial Average was also up 0.9 per cent.

London’s top flight slumped to near threemonth lows yesterday as a result of the gloom surrounding the eurozone debt crisis, but reports that the opposition parties may support the Government gave a reason for buyers to return.

Commodities trader Glencore’s share price rebounded after a recent rocky spell. It was up 16p to 495.2p while miners on the rise included Antofagasta, which added 62p to 1272p.

BP gained 16.1p to 445.7p after reaching an out-ofcourt settlement with one of the companies it contracted for work on the Deepwater Horizon rig, which exploded a year ago.

The deal will see Weatherford – one of the world’s largest oil services providers – pay BP $75m (£46.3m) in return for protection from claims resulting from the accident.

In corporate results, strong trading at Whitbread’s flagship businesses Premier Inn and Costa helped propel the leisure group to the top of the bluechip risers board.

While the first quarter improvement was offset by tougher conditions for its pub restaurants, Whitbread shares jumped seven per cent, or 102p to 1587p.

The biggest blue-chip decline came from SABMiller, after the brewer declared its interest in buying Australian brewer Foster’s. The approach, worth £6.2bn, was rejected but shares still fell 79p to 2103p.