FTSE surges 1.4% higher on back of eurozone progress

London’s FTSE 100 Index surged 1.4% higher today as hopes of a resolution to the eurozone crisis offset another day of scandal for Britain’s banking sector.

FTSE surges 1.4% higher on back of eurozone progress

London’s FTSE 100 Index surged 1.4% higher today as hopes of a resolution to the eurozone crisis offset another day of scandal for Britain’s banking sector.

Barclays shares came under further pressure after yesterday’s 15.5% tumble following revelations of its rate-rigging scandal.

But Lloyds Banking group and Royal Bank of Scotland made gains today as the wider index leapt 78.1 points to 5571.2 after politicians agreed at a summit in Brussels that struggling banks could have direct access to the EU’s bailout fund without adding to Government debt.

The Dow Jones Industrial Average also rose 1.8% in early trading, despite figures showing that US consumer spending failed to rise between April and May, while markets in France and Germany were up more than 4%.

The breakthrough saw Italy and Spain benefit from a sharp drop in their implied borrowing costs on bond markets, while the euro was boosted on currency markets.

The pound fell against a strengthened euro, to €1.24, but rose to $1.57.

UK banks were boosted by the prospect of more help for the sector, which suffered severe losses yesterday amid fears that a costly rate-rigging scandal uncovered at Barclays was set to spread to other lenders.

And a fresh scandal emerged today when the Financial Services Authority revealed mis-selling in the banking industry involving complex interest hedging products.

But Royal Bank of Scotland rose 4%, or 8.9p at 215.3p, while Lloyds rose 1.2p to 31.1p, or 4%, and HSBC was up 2.9p at 561.1p.

Barclays fell another 2% or 2.8p to 162.9p after more than £3bn was wiped off its market value yesterday amid fears that its £290m rate rigging fine might be dwarfed by multi-billion pound legal claims.

Heavily weighted mining stocks were the main drivers of the Footsie gains as the developments in the eurozone boosted hopes for the global economy.

Miner Evraz was the biggest riser, up 19.7p at 260.7p.

Outside the top flight, online bookmaker Betfair saw its shares rise 2% after it revealed £1bn had been bet on the Euro 2012 football championship, breaking records for the value gambled on a single sporting event.

The group toasted a 17% hike in underlying profits to £85.7m in the year to April 30 and said the number of people gambling from mobile phones had doubled. Shares were up 13p at 748p.

Meanwhile, housebuilder Berkeley saw its shares rise 3% after it reported a 58% rise in profits to £214.8m in the year to the end of April.

Shares were up 44p at 1409p as it said prospects for new housing in its core market of London and the South East remain strong.

The biggest Footsie risers were Evraz up 19.7p to 260.7p, CRH ahead 84p to 1232p, Weir group up 80p to 1530p and Hargreaves Lansdown up 26.5p to 529.5p.

The biggest Footsie fallers were Pennon Group down 15p at 762p, Barclays off 2.8p at 162.9p, Vodafone down 1.6p to 179.3p and Tesco down 1.8p to 310.1p.

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