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FTSE recovery gathers strength on bank rally

Continued recovery in embattled banking sector helps FTSE 100 recover bulk of last week's losses.

 
FTSE recovery gathers strength on bank rally

Banks and other financial stocks have led the FTSE 100 higher, as a continued recovery in the embattled sector helped the UK blue-chip index recover lost ground.

The FTSE 100 rose 114 points, or 2%, to 5,823, building on Friday's strong surge and nearly recovering all of last week's losses.

Banks were in the ascendancy, continuing to recover ground from a sustained sell-off sparked by fears of faltering global growth and worries over the impact of negative interest rates on margins.

Standard Chartered (STAN) jumped 3.9% to 445.8p, Barclays (BARC) rose 3.1% to 162p, Royal Bank of Scotland (RBS) was up 2.7% at 246.5p and Lloyds (LLOY) added 2.6% to 60.1p.

Insurers and fund groups also surged. Old Mutual (OML) was up 4.8% at 167.7p, Prudential (PRU) rose 4.3% to £12.07, Aberdeen Asset Management (ADN) was up 3.4% at 227.9p and Legal & General (LGEN) added 3.3% to 214.6p.

In a broad-based rally, only a handful of stocks made losses, including precious metals miners Fresnillo (FRES), down 4.5% at 856.5p and Randgold Resources (RRS), 4.6% lower at £58.75, as investors dumped the safe havens of silver and gold amid the bullishness.

The rally was sparked by hopes of further stimulus in China and Japan, after poor Chinese trade data and Japanese gross domestic product and industrial production figures.

Japanese stocks surged overnight, with the Nikkei 225 rallying 7.2%, following a 10.3% slump the previous week.

'It seems that investors are banking on further action from [prime minister Shinzo] Abe and [Bank of Japan governor Haruhiko] Kuroda, the promise of further stimulus helping the Japanese index recover a chunk of last week's losses,' said Connor Campbell, analyst at Spreadex.

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by Daniel Grote on Jun 30, 2016 at 16:37

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