Barclays underperformed its peers on Friday after Dresdner Kleinwort predicted that the bank would announce plans to raise £3bn with its trading statement on May 15.

While HBOS climbed 6.6 per cent to 495½ and Royal Bank of Scotland added 5.5 per cent to 365¼p, Barclays added a more modest 2.4 per cent to end at 476p.

“Without action, we foresee a 4.7 per cent equity tier 1 ratio in the first half of 2008. Given the current environment and the group’s growth aspirations, we expect management to boost capital ratios,” Dresdner said.

However, the broker believes Barclays, which it also sees taking £3bn of writedowns and paying a scrip interim dividend, will opt for an equity injection over a rights issue.

“Of the UK domestic banks, Barclays is probably the most attractive to a sovereign wealth fund, given its global business lines and ‘east not west’ expansion plan.” China Development Bank and Temasek are already on the Barclays shareholder register.

Meanwhile, leading shares woke from their four-day slumber to close sharply higher.

Powered by better-than-expected US employment data and fresh liquidity injections from central banks, the FTSE 100 rose 128.2 points, or 2.1 per cent, to 6,215.5 – its best finish since mid-January.

The blue-chip index is now down just 241 points, or 3.7 per cent, for the year, and has risen 800 points, or nearly 15 per cent, from its March low. It gained 124.1 points, or 2 per cent during the week.

The FTSE 250 rose 217.8 points, or 2.1 per cent, on Friday to 10,290.8.

Retailers led the market higher. Traders said the sector had been lifted by short sellers buying back positions before the long holiday weekend.

Next, which reports first-quarter numbers next week, rose 6.8 per cent to £12.25 while Kingfisher added 6 per cent to 138.9p.

J Sainsbury was marked 2.9 per cent higher at 391½p as traders realised that Delta Two, the investment fund backed by the state of Qatar, would be free to bid again next week.

Xstrata added 3.9 per cent to £41.91 in spite of rumours that it had appointed NM Rothschild to advise on a possible takeover of Australia’s Macarthur Coal. Traders said they would not be surprised if Xstrata was looking.

Macarthur produces about 6m tonnes of coking and thermal coal from two mines in Central Queensland. Xstrata also has mines in the same area so there would be some synergies.

Takeover target Rio Tinto rose 4.6 per cent to £61.06 after its chairman, Paul Skinner, suggested that a break-up of the company might be the best way to create value for shareholders.

Insurers were in demand after Germany’s Allianz said it was keen to expand its presence in the UK market.

Royal & Sun Alliance moved up 5.2 per cent to 141.6p, while Admiral added 5.4 per cent to 906p.

On the downside, British Energy slipped 3.9 per cent to 728½p following reports which claimed that Germany’s RWE might bid for parts of the power company but not all of it.

Among the mid-caps, Capital & Regional, the self-styled co-investing property assert manager, suffered another pounding as a statement designed to calm concerns about debt levels at one of its funds backfired.

Its shares fell a further 17.9 per cent to 309¾p after the analyst who triggered Thursday’s fall, Harm Meijer of JPMorgan, made further bearish comments.

“We remain of the view that the covenants are an issue and that any avoidance of breach will come at a cost,” he said.

Aberdeen Asset Management added 4.4 per cent to 149¼p after Martin Hughes’ Toscafund declared an increased stake of 16.1 per cent while Bovis Homes moved up 1.7 per cent to 471p amid rumours of a merger with Redrow, 2.5 per cent higher at 263¼p.