FTSE 100 close: Bank test hopes boost stocks
Banks led the FTSE 100 index closed 3% higher today in a buoyant return to trading after the long bank holiday weekend.
Market movers: We round-up the latest news from the Stock Exchange
The Dow Jones Industrial Average was 22.1 points down at 8404.6 after as Wall St anticipates Thursday's release the bank 'stress tests' results.
Optimism in the UK banking sector pushed the FTSE 100 index 93.7 points higher today to close on 4336.9. The blue-chip index has now rallied 25% from a six-year low hit on 9 March.
'Justifiable though the market recovery is, there are some huge bumps ahead. Thursday may be one of those big bumps, in the devil in the details of what US banks require,' Howard Wheeldon, senior strategist at BGC Partners, told Reuters. 'Between now and then, the market may do better to sit on its hands.'
The rumour is that about 10 of the 19 US banks being stress tested will be told to raise more capital.
Royal Bank of Scotland was 4p up to 48p in a big week for the sector as RBS and Barclays prepare to report on trading.
The part-nationalised group also announced finance director Guy Whittaker - part of the board which agreed the bank's disastrous bid for ABN Amro in 2007 - had agreed to step down.
Lloyds Banking Group followed not far behind with a gain of 11.5p to 121.1p, while Barclays was 29p higher at 298p.
Asian-facing bank Standard Chartered added to the positive mood after a 'strong' first quarter, delivering record levels of income and profit. This helped Standard rise 90p to 1150p, while HSBC gained 35.5p to 517.5p.
Insurers were also strongly ahead. Shares in Aviva jumped 19.75p higher to 327.5p as the insurer rolled out its China operation by opening a new office in Hubai.
Richard Curr, head of dealing at Blue Index, sees 'upward momentum for the latest rebound in financials, with the insurance sector driven by the improving sentiment and the level of the FTSE 100 itself'.
'The latest news from Aviva,' he says, 'regarding its China rollout re-affirms the insurer's position as a decent play for a general stock market recovery.' Rival Prudential lifted 40.25p to 436.25p.
Meanwhile, increased optimism over the economy supported base metal prices and helped the heavyweight miners. Vedanta Resources was the leading Footsie riser, up 130p to 1260p, while Eurasian Natural Resources and Kazakhmys were close behind - up 56p to 676p and 56.5p to 646.5p respectively.
Oil prices around the $54 a barrel mark also buoyed BP, up 7.25p to 493p, and Royal Dutch Shell, which added 26p to 1578p.
Travel firms and airlines recovered some of last week's swine flu hit as concerns over the severity of the outbreak begin to recede. British Airways rose 17.9p to 165.9p and Thomson owner TUI Travel added 18p to 268p.
Among the few fallers was software group Sage after weekend reports of major job losses. The firm will post interims later this week. Its shares were down 3.5p at 185.3p.
In a quiet session for corporate updates, shares in Italian restaurant chain Carluccio's jumped 19% after it said it had received a preliminary takeover approach.
Richard Caring, the restaurateur who owns landmark London dining spots such as the Ivy, J Sheekey and Le Caprice, is a major shareholder in Carluccio's and has recently been linked with speculation over a possible bid. Shares were 12.12p higher at 90.62p.
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