The London market rallied today, bouncing back from yesterday's five-year low following gains on Wall Street last night.

In the first 20 minutes of trading, the FTSE 100 Index of leading shares was up 50.60 points at 4443.20. Minutes earlier it had bounced 78.50 points to 4471.10.

Traders were expecting a rally after last-minute gains on Wall Street last night, although sentiment remained fragile ahead of today's Independence Day holiday in the United States.

Tom Hougaard, trader at bookies City Index, said: "The US managed to put on a decent performance last night before their holiday today and we believe this will have a very positive impact over here and in Europe."

Yesterday's slump left the London market at its lowest close for more than five years, and its worst level since Tony Blair came to office.

About £37 billion was wiped from the value of shares as another slide on Wall Street send shudders through investors on this side of the Atlantic.

By the close of trading yesterday, the FTSE 100 Index of leading shares plunged through post September 11 lows and was down 154.20 points at just 4392.60.

The lowest it reached in the aftermath of the terrorist attacks was 4433.70 on September 21.

Yesterday's slide brought the Footsie to its lowest point since April 28 1997.

Meanwhile, the Halifax, Britain's biggest mortgage lender, said house prices rose by 2.3 per cent last month, lifting annual house price inflation for the year to the end of June to 19.3 per cent.

The buoyant property market was being supported by low interest rates, income growth and supply shortages, particularly in London and the South East.

The cost of a house has risen by 11 per cent this year, taking the average house price to £109,667.

Earlier in the week Nationwide reported a 3.3 per cent jump in house prices, pushing annual house price inflation up to 19.8 per cent.