The London market raced ahead today as investors regained confidence in banking stocks after news that HSBC’s sub-prime losses had not led to further profit woes.
The Bank of England’s latest inflation forecast also gave blue chips a boost as the report appeared to confirm hopes for a cut in rates next year.
The FTSE 100 Index soared 93.3 points to 6455.7 by mid-morning in a busy day for corporate and economic news.
HSBC gained 4%, or 32p, to 874.5p as it reassured profits were ahead of last year despite a 3.4 billion US dollars (£1.6bn) third quarter hit to its US consumer finance division – 1.4 billion US dollars (£700m) more than expected.
Just yesterday Goldman Sachs also helped allay fears in the US after it said it did not expect a significant impact from the US sub-prime mortgage turmoil.
Other banking stocks on the front foot included Royal Bank of Scotland up 17.25p at 475p, Halifax Bank of Scotland ahead 30.5p to 837.5p, while Barclays added 20p to 547p.
Friends Provident headed the Footsie risers board after it announced a strategic review and said chief executive Philip Moore had left the group. This was viewed positively in the face of its recent failed merger attempt with Resolution, sending shares up 9.8p at 169.3p.
Miners were also making strong gains, with Lonmin – up 196p at 3273p - benefiting from full year results that came in ahead of expectations in spite of production woes.
Meanwhile, Sainsbury’s failed to benefit from half-year results slightly ahead of market expectations. The stock, which has been under pressure following an aborted takeover attempt, slipped 8.25p to 417.5p.
Panmure Gordon cut its target for the supermarket and said it believed rival Tesco offered a more attractive proposition.