The FTSE index leapt higher on Wednesday, led by strong banks and commodity issues as investors welcomed the outcome of a European Union summit on Wednesday designed to resolve the region's debt crisis.

European leaders agreed to boost the region's rescue fund and struck a deal on a 50 percent writedown for private bondholders on their Greek debt.

French President Nicolas Sarkozy said on Thursday, after the summit, that the region's rescue fund will be leveraged four or five times, giving it firepower equivalent to about 1 trillion euros ($1.4 trillion).

Banks were among the strongest blue chip performers, led by Barclays the top FTSE 100 gainer up 6.1 percent, as investors expressed relief that a need for an immediate recapitalisation of the UK sector had been ruled out in the European rescue plans.

Continental European banks, however, will be required to raise a total of 106 billion euros ($146.5) by the end of June 2012, following an agreed 50 percent haircut to their holdings of Greek sovereign debt.

We expect the latest bail-out and recapitalisation announcement to be supportive to UK bank share price performance in the short-term as it removes the immediate risk of contagion from a broader collapse in the European banking system, said Shore Capital in a note.

However, the broker said it remained concerned about the medium-term prospects for the UK banks and believes that a further recapitalisation of the domestic UK banks can still not be ruled out at some point over the next few years.

At 0750 GMT, the FTSE 100 index <.FTSE> was up 123.00 points, or 2.26 percent at 5,676.24, having ended 0.5 percent higher on Wednesday at a 2-1/2 month closing high.

Commodity issues also saw strong demand as investors moved back into riskier assets, with crude oil gaining more than 2 percent, copper also up over 2 percent, and gold hitting a one-month high.

Royal Dutch Shell was the top energy gainer, up 2.0 percent, after the firm reported a doubling in third-quarter net profit, thanks to higher oil prices.

Today marks the 25th anniversary of Big Bang, a transformational event for the City of London. One market adage which predates even that milestone is Never sell Shell. Today's update is a timely reminder why this is still the case, said Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers.

Kazakhmys stood out among the miners, up 6.2 percent as the Kazakh-based miner posted a dip in third-quarter copper production, but said it was on track to meet its full-year output target and had seen steady demand.

There were no blue chip fallers, but drugmaker AstraZeneca underperformed, ahead only 0.6 percent as it posted third-quarter sales up 4 percent to $8.21 billion, but in local currencies revenue fell 2 percent.

Overall, it was a reasonable quarter, said Bernstein Research, repeating its market-perform rating on AstraZeneca.

On the macroeconomic front, following on from Wednesday's CBI industrial trends report, which showed a sharp drop in orders, the British business confederation issues its October distributive trades report at 1000 GMT, with a reading of -15 forecast, down from -1 in September.

Across the Atlantic, all eyes will be on the final reading for U.S. third quarter GDP, due at 1230 GMT, with a rise of 2.5 percent forecast, up from 1.3 percent in the previous quarter.

U.S. weekly initial jobless claims will also be released at 1230 GMT, with September pending home sales due at 1400 GMT.

(Editing by Jon Loades-Carter)