Markets

FTSE records biggest rise since Trump election as fears for Italian bank abate

hopes: The entrance of Monte dei Paschi headquarters, in Siena, Italy. Fears for the future of the world's oldest bank have abated with hopes that the Italian government will bailout the establishment

HOPES that Italy may take a controlling stake in troubled banking giant Monte dei Paschi di Siena helped the London market record its biggest rise since Donald Trump's shock US presidential victory.

The FTSE 100 Index closed up 122.39 points to 6,902.23, as British banking shares soared following speculation that Italy would buy up a €2 billion (£1.7bn) slice of the world's oldest lender.

Possible government intervention comes after private investors became cautious about ploughing funds into Monte dei Paschi during a period of acute political uncertainty.

Prime minister Matteo Renzi was scheduled to resign at 7pm yesterday after a bruising defeat for the Italian government in the country's referendum on constitutional reforms.

Monte dei Paschi has been looking to haul in €5bn (£4.2bn) from private investors to shore up its battered balance sheet and prevent a collapse that would deal a hefty blow to the European banking sector.

Shares in Lloyds Banking Group were up more than 4 per cent, or 2.8p to 62.3p, while Standard Chartered rose 27.7p to 684.7p and HSBC climbed 25.6p to 679.6p.

London's top flight was also enjoying a boost from sterling's latest slump and a strong rally from mining stocks.

The collapse of the pound following the Brexit vote has been a boon for multinational firms on the FTSE 100, as many tend to benefit from earnings in currencies that are stronger than the pound.

Rio Tinto was the biggest riser on the London market following an upgrade from Credit Suisse to outperform from neutral.

Shares rose 6 per cent, or 200p to 3,221.5p, while Anglo American jumped 57.5p to 1,252p as iron ore prices recover.

Across Europe, Germany's Dax was 1.9 per cent ahead and the Cac 40 in France pushed 1.4 per cent higher.

On the currency markets, the pound sank further against the greenback after output for UK manufacturing and industrial production recorded surprise falls.

Figures from the Office for National Statistics (ONS) showed manufacturing output fell 0.9 per cent in October, down from a 0.6 per cent rise in September, with economists eyeing 0.2 per cent growth.

Industrial production also plunged below expectations, recording its largest monthly drop in four years, declining 1.3 per cent in October.

It caused the pound to sag 0.6 per cent against the US dollar to 1.260, while sterling was 0.9 per cent lower versus the euro at 1.172.

The UK currency had initially slipped after Prime Minister Theresa May said she would commit to publishing a plan for Brexit before triggering Article 50 in March next year.

The price of oil slipped on fears that Opec's landmark deal to support prices might turn out to be a damp squib.

Brent crude was down 1.2 per cent to US$53.27 a barrel, as investors expressed doubt over the cartel's ability to cut production by around 1.2 million barrels a day to a total production of 32.5m barrels a day from January 2017.

In UK stocks, train and bus operator Stagecoach was 2 per cent ahead on the second tier after handing confidence to investors that it could hit its full-year targets despite seeing profits slip.

Shares were up 5.3p to 211p, with half-year pre-tax profits falling 1.4 per cent to £89.5 million, while revenue nudged up 1.6 per cent to £2bn over the period.

The biggest risers on the FTSE 100 Index were Rio Tinto up 200p to 3,221.5p, Anglo American up 57.5p to 1,252p, International Consolidated Airlines Group (IAG) up 19.8p to 434.7p, Lloyds Banking Group up 2.8p to 62.3p.

The biggest fallers on the FTSE 100 Index were Shire down 204p to 4,357p, WPP down 47p to 1,647p, Pearson down 8.5p to 784.5p, Croda International down 32p to 3,135p.

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