INVESTORS breathed a sigh of relief as the prospect of a deal to avert military action in Syria emerged, fuelling strong gains on the FTSE 100 Index.

London’s top tier added 53.2 points to 6584, bolstered by the receding prospects of US strikes after Russia’s call for the country to hand over chemical weapons to international authorities for destruction.

The possibility that the Middle East will avoid further international conflict helped cut the price of oil, which fell more than a dollar a barrel to nearly $107, in turn boosting airline stocks.

Brent crude dropped as low as $111.3 a barrel in London.

Sentiment was boosted further by more signs of recovery for the powerhouse Chinese economy, with impressive trade figures at the weekend followed by figures showing that factory output expanded last month at its fastest rate this year. Industrial production rose 10.4 per cent, accelerating from July’s 9.7 per cent, according to official Chinese data.

European markets powered ahead, with Germany’s Dax up more than two per cent and France’s Cac 40 not far behind. New York’s Dow Jones Industrial Average was nearly 100 points up in early trading.

Budget carrier easyJet was the steepest climber on the FTSE 100, up seven per cent or 91p to 1358p thanks to the fall in oil prices.

British Airways owner International Airlines Group was also among the top risers with a 14.3p increase to 319.8p.

Commodities and trading firm Glencore Xstrata also did well as it hiked plans for cost-cuts, saying it now expects to deliver at least $2bn (£1.3bn) of synergies next year from its megamerger, four times more than initial estimate. Shares rose 7.4p to 328.8p, up more than two per cent.

But Premier Inn owner Whitbread slid more than two per cent or 78p on the blue-chip index to 3138p after like-for-like growth slowed to 2.1 per cent in the 11 weeks to mid-August, as its Costa coffee chain was hit by the July heatwave.

Drugs group Glaxo- SmithKline was under pressure after US regulators published draft guidance that could pave the way for generic versions of its blockbuster respiratory inhaler Advair.

Glaxo fell 41.5p to 1598.5p, adding to losses the previous day after its sale of soft drinks brands for £1.3bn failed to fuel share gains.

A rally in the banking sector helped shares in Lloyds Banking Group jump to the highest level for three years – up 1.2 to 78p – fuelling speculation of imminent plans for the Government to start selling down its 39 per cent stake in the group.