* FTSE 100 surges 3.9 pct
* FTSE closes for more than six hours in outage
* Banks gain sharply on U.S. bailout of Fannie, Freddie
* Firmer metal, crude prices lift commodity stocks
By Simon Falush
LONDON, Sept 8 (Reuters) - Britain's top share index closed
up 3.9 percent on Monday, supported by improved sentiment on the
banking sector, but trading was severely disrupted with trading
on the London Stock Exchange halted for more than six hours.
Sentiment on the financial sector improved after Washington
took control of mortgage finance companies Fannie Mae <FNM.N>
and Freddie Mac <FRE.N> to support the U.S. housing market,
leading to a sharp rise in major UK-listed banks.
This helped the FTSE 100 <> to rise 205.6 points to
close at 5,446.3, its biggest single-day rise since Jan. 24 and
recovering some of last week's 7 percent fall, its worst weekly
loss in six years.
However, trading was suspended between 0813-1500 GMT, with
the LSE citing problems with connectivity, leaving traders
frustrated at being locked into positions for such a long
period. The LSE's share price closed up 5.5 percent.
"It's awful. On a day when the eyes of the world are
watching all the financial markets, for us not able to trade
it's appalling," one trader said.
"We have the biggest takeover in the history of the known
world in the Freddie Mac stuff and then we can't trade. It's
terrible."
Banks, which have been battered by the global credit crisis,
were the top-weighted gainers, adding 78 points to the UK
benchmark index.
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, HSBC
<HSBA.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and Standard
Chartered <STAN.L> rose between 5.9 and 11.9 percent.
EMERGENCY STEPS
The bailout of Fannie Mae and Freddie Mac, prompted by
worries over the companies' shrinking capital, was the latest in
a series of emergency steps taken by U.S. authorities to quell
what is now a year-long credit market crisis that has helped
push many economies toward recession.
(For a TAKE A LOOK on Fannie Mae and Freddie Mac bailout,
double click on [])
Major European indexes also finished the day sharply higher
and U.S. stocks were broadly higher.
Financial stocks gained with Standard Life <SL.L>, Old
Mutual <OML.L>, Prudential <PRU.L> and hedge fund Man Group
<EMG.L> climbing between 3.5 and 11.0 percent.
Energy stocks were also in demand as crude prices <CLc1>
traded above $107 a barrel on worries that Hurricane Ike would
tear through the Gulf of Mexico.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L>, Cairn Energy <CNE.L> and Tullow Oil <TLW.L> advanced
between 1.7 and 5.8 percent.
Higher metal prices also boosted mining stocks, with BHP
Billiton <BLT.L> adding 3.3 percent, Rio Tinto <RIO.L> putting
on 4.1 percent, Anglo American <AAL.L> and Xstrata <XTA.L>
gaining 4.0 percent, and Eurasian Natural Resources <ENRC.L> up
3.6 percent.
BHP, which announced a final dividend of 41 cents per share,
said it was confident about the medium term outlook and ability
to consistently deliver future earnings and cash flow.
Lonmin <LMI.L> strengthened 0.9 percent after the Sunday
Telegraph reported the miner is exploring a three-way merger
with two rivals to create the world's second-biggest platinum
company and evade being taken over by rival Xstrata <XTA.L>.
ITV <ITV.L> climbed 4.3 percent after a board member of
Mediaset SpA <MS.MI>, Italy's biggest independent broadcaster,
controlled by the family of Prime Minister Silvio Berlusconi,
said it is looking at a number of possible acquisitions,
including the UK broadcaster.
Drugmakers, seen as defensive, underperformed, with
GlaxoSmithKline <GSK.L> off 1.6 percent and AstraZeneca <AZN.L>
up 0.2 percent.
Among mid-caps, DSG International <DSGI.L> added 7.2
percent. The electrical goods retailer said on Saturday it was
not in talks with bigger rival Metro AG <MEOG.DE> about a
possible takeover by the German firm.
(Editing by Rory Channing)
