The London market finished the week on a high today as most EU countries agreed to explore plans for a closer union to get to grips with the region’s debt crisis.
With all 26 EU member states apart from the UK having agreed in principle to push ahead with a separate accord on a “fiscal compact” for the euro, the FTSE 100 Index rose 45.4 points at 5529.2, with banks leading the way.
The Dow Jones Industrial Average in the US was up more than 1% as the London market closed, while the Dax in Frankfurt and the Cac40 in Paris rose by about 2%. This was despite the lack of detail surrounding the plans to shore up the eurozone’s finances by penalising overspending governments.
The pound was down against the euro at 1.17 as the single currency was boosted by the developments but sterling was up against the dollar at 1.57.
Banks recovered some of the ground lost yesterday after the European Banking Authority said continental banks needed to fill a gap of €134bn to hit new minimum levels of capital.
Despite rating agency Moody’s downgrading three leading French banks, citing the worsening eurozone debt crisis, Lloyds Banking Group was the biggest riser, up 7%, or 1.6p to 26.7p. Royal Bank of Scotland added 1.1p to 22p and Barclays lifted 9.8p to 190.2p.
IG Index sales trader Ben Critchley said David Cameron’s continued refusal to entertain an EU-wide tax on financial transactions also helped sentiment.
However, he added the sector remained vulnerable following the downgrading of some continental European banks.
Miners were also helping to prop up the London market, with Antofagasta 36p higher at 1228p, Kazakhmys up 23.5p at 943p and Eurasian Natural Resources 19p higher at 685p.
Outside the top flight, shares in housebuilder Bellway were 3% higher after a double dose of good news for investors.
The company said its market remained “remarkably resilient” with a 14% increase in reservations and an expected 5% improvement in sale completions for the first half of its financial year.
In addition, it said it had secured new £150m lending facilities with Lloyds Banking Group. Shares were 20.5p higher at 749p while the update helped a number of other stocks in the sector.
Redrow added 3p to 114.2p, Taylor Wimpey cheered 0.6p to 37p and Barratt Developments lifted 2.8p to 96.7p.
Elsewhere, Mr Kipling and Hovis owner Premier Foods improved 3% after Thursday’s announcement that it had sold its loss-making chilled foods business Brookes Avana for £30m.
Shares in the heavily-indebted firm, which is looking to focus on its core brands, were 0.1p higher at 5.9p.
The biggest Footsie risers were Lloyds Banking Group up 1.6p at 26.7p, Barclays ahead 9.8p at 190.2p, Royal Bank of Scotland up 1.1p at 22p, and Antofagasta ahead 36p at 1228p.
The biggest Footsie fallers were Essar Energy down 3.2p at 222.9p, Weir Group off 28p at 1965p, GlaxoSmithKline down 16p at 1424p, and Aggreko off 20p at 1853p.