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Debt Crisis: European and US stocks gain on hopes that politicians will find solution to chaos

A strong start on Wall Street and a recovery in metal prices boosted global markets for a third day in a row as some of the nervousness over the European debt crisis eased.

A survey showing US house prices rose for the fourth month running in July helped the Dow Jones Industrial Average jump almost 2pc, adding to a 2.5pc rise yesterday, while markets in Germany and France both rose more than 4pc.

The FTSE 100 index rose by 156 points to 5,246.8 as an improvement in metal prices spurred a rush back into mining stocks.

And recent optimism that Europe's banks will be given substantial capital injections to help them cope with a default on Greek debt added to the upbeat mood.

Mining stocks, which have slumped in recent days because of sharp falls in commodity prices, were on the front foot as prices of metals rallied.

Gold added almost $28 to 1,654 dollars per ounce, while silver and copper futures also posted strong gains.

Financial stocks were also benefiting from the improved market sentiment, with Barclays up 10p at 166p and Aviva 13.1p stronger at 308.1p.