FTSE up over 1%, Barclays among the risers

Barclays shares rose 3% today as chairman Marcus Agius’s decision to step down in the wake of the rate-rigging scandal was backed by investors.

The wider FTSE 100 Index rose 69.5 points or 1.2% to 5640.6, its highest close for nearly two months, with banking shares among the biggest risers.

Barclays’ shares rose 5.6p to 168.4p after Mr Agius announced his departure, with analysts advising shareholders to snap up the stock following heavy falls last week.

David Jones, chief market strategist at IG Index, said Mr Agius’s resignation as “a step in the right direction”.

The improved sentiment was driven by last week’s agreement in Brussels, which will allow struggling banks to take financial aid directly from the EU without the debt adding to governments’ debt mountains and driving up their borrowing costs.

Lloyds Banking Group was ahead 0.4p at 31.5p, Royal Bank of Scotland rose 3.7p to 219p and HSBC advanced 9p to 570.1p.

The improved sentiment came despite figures revealing that eurozone unemployment hit another record in May as the financial crisis pushed the continent toward the brink of recession. The Dax in Germany and the Cac40 in France were both up more than 1%.

But the Dow Jones Industrial Average in the US was down 0.5% as the London market closed, after data showed the manufacturing sector shrank in June for the first time in nearly two years, fuelling fears of a slowdown in the world’s biggest economy.

The pound was up against the euro at 1.25 as the single currency lost some of the gains it made in the wake of the European summit last week.

But sterling was down against the dollar at 1.57 as the greenback was hit by the worrying manufacturing data.

In corporate news, AstraZeneca was 29p higher at 2882p after it announced a partnership with Bristol-Myers to buy US group diabetes specialist Amylin for $7bn (€5.5bn).

Outside the top flight,oil company Soco International was 7% higher after it agreed to buy the remaining 20% it does not already own in its Vietnamese subsidiary from Lizeroux Oil & Gas for $95m (€75m). Shares were up 20p at 309.4p.

The biggest Footsie risers were Aviva up 10.1p at 282.7p, Petrofac ahead 49p at 1437p, Barclays up 5.6p at 168.4p, and WPP ahead 23p at 796p.

The biggest Footsie fallers were Admiral down 23p at 1169p, BSkyB off 9p at 687.5p, Evraz down 2.2p at 258.5p, and Vedanta Resources off 6p at 906p.