Shares storm higher on jump in bank profits

Shares posted sharp gains in late morning deals after much better-than-hoped for profits from HSBC boosted the banking sector.

The FTSE 100 was up 107.47 points, or 2%, at 5,365. The mid-cap FTSE 250 was 156 points higher at 5,363. 

Data on the outlook for UK manufacturing provided some support as the news was mixed but not as bad as some had feared. That lifted the pound once cent against the doller to $1.5815.  

Strength in Asia where markets gained despite some weak manufacturing data in China and Hong Kong also helped buoy sentiment.

One London trader said: 'Despite the weaker Chinese PMIs, Asian markets are firmer overnight as the weaker data was broadly expected (indeed there were sub-50 whispers for the main PMI number on Friday) and has also encouraged some hope of policy relaxation in China.'

Banking stocks were higher after HSBC reported a 120% jump in pre-tax profits to $11.1 billion (£7 billion) from $ 5 billion a year ago. It was confident the fall in bad loans was part of a trend that would continue. HSBC shares rose 33.7p to 679.8p.

The sector was further boosted by better-than-expected results from French banking giant BNP Paribas.

Lloyds, 3.38p higher at 72.64p, and RBS, up 2.14p at 52.1p, also advanced ahead of their half-year results on Wednesday and Friday respectively. 

Mining stocks were boosted by higher metals prices and investor hopes that much of the recent concern about the global economy was priced in to asset prices. Vedanta jumped 119p to £25.60 while Anglo American continued to make gains after last week saying it would resume dividend payments, rising 93.5p higher to £26.18.  

Product testing group Intertek topped the risers, up 101p at £16.78 after its lifted its full-year guidance.