Share prices soared on world markets after US election results showed Americans were not enthusiastic about an impeachment of President Clinton.

European markets were also boosted by hopes of interest rate cuts. In London, the market rose more than 2 per cent in anticipation of a reduction in interest rates today by the Bank of England's monetary policy committee.

Share prices in Paris and Frankfurt were almost 3 per cent higher, while the Irish stock market gained almost 1 per cent.

In London, the FTSE 100 index closed 2.2 per cent higher, driven by expectations of an imminent cut in domestic interest rates and the rally on Wall Street. By the close, the benchmark index had gained 119.0 points to 5622.9 - its biggest daily points rise for nearly three weeks.

Dealers said many of the big gains were fuelled by acute stock shortages following strong demand from fund management groups eager to put cash into leading equities.

The rally in the United States came after stock markets rose overseas. Stocks in Japan jumped 4.1 per cent, sparking rallies elsewhere in Asia overnight.

A common denominator on Wall Street and overseas was the growing belief that Washington had been providing leadership in the global financial crisis, First Albany's chief investment officer, Mr Hugh Johnson, said. Investors are now betting that the prospects of impeaching President Clinton are fading. "It's good news that there will not be a leadership vacuum," Mr Johnson said.

The Dow Jones index closed up 76.99 on 8783.14.