London’s leading shares index surged 3% today as investors cheered the long-awaited action plan from European leaders to tackle the region’s debt crisis.
Banking shares led the FTSE 100 Index 160.6 points higher to 5713.8 after leaders sealed a three-point deal to prevent the continent falling into recession and dragging global markets with it. The index gained £41.5bn.
EU leaders agreed with banks a 50% haircut on Greek debt and to boost the eurozone bailout fund to €1tn, which follows an earlier decision to shore up banks’ finances.
The pound was down against the euro at 1.13 after the single currency was boosted by the deal. But sterling was up at 1.61 against the dollar after the greenback was sold off as investors moved away from safe havens.
Brent crude oil rose 2% to 112 US dollars a barrel as investors took a rosier view of prospects for the world economy.
Wall Street’s Dow Jones Industrial Average rose by more than 2% as the London market closed, after figures showed the US economy grew by an annual rate of 2.5% between July and September, nearly double the previous three months.
Elsewhere, France’s Cac-40 was up 6% and the Dax in Germany jumped 5%.
Carsten Brzeski, an analyst at ING Bank, said: “Even if it probably was not the final word on the crisis, it is again another important step in the right direction.”
In London, Barclays was the biggest riser, up 18%, or 31.4p at 210p. Royal Bank of Scotland was up 10%, or 2.5p at 27.3p, while Lloyds Banking Group advanced 2.8p to 37.1p.
Heavily-weighted mining stocks gave support with copper giant Kazakhmys, which impressed investors with its third-quarter production report, rising 9% or 87p at 1016p.
Oil giant Royal Dutch Shell cheered investors after it said its net profit in the third quarter more than doubled, driven by strong oil and rising natural-gas prices and boosted production.
Shell posted net profit for the quarter of $6.98bn, compared with $3.46bn a year earlier. Shares were up 11p at 2330p.
Outside the top flight, Clinton Cards saw shares surge 12% after it revealed it had secured credit facilities with its lenders until 2013.
Shares were up 1.3p at 11.8p despite the greeting cards retailer swinging to a loss of £10.7m in the year to July 31.
Outdoor clothing group Blacks Leisure fell out of favour with investors after revealing a pre-tax loss of £16m in the six months to August 27, compared to a £7.2m loss the previous year. Shares were down 8% or 0.8p at 8.5p.
The biggest Footsie risers were Barclays up 31.4p at 210p, Vedanta Resources ahead 154p at 1411p, Xstrata up 108p at 1111p, and Royal Bank of Scotland ahead 2.5p at 27.3p.
The biggest Footsie fallers were National Grid down 12.5p at 627.5p, Shire off 32p at 1973p, United Utilities down 7p at 610.5p, GlaxoSmithKline off 14p at 1379p.