The formation of a German government after many weeks of talks and confirmation of the UK’s accelerating recovery rate put markets on the front foot.
The more domestically-focused FTSE 250 was up 100.54 points at 15,406.67 after official figures put quarterly growth at 0.8 per cent and highlighted strong consumer spending. But the FTSE 100 added just 13.25 points at 6,649.47 as the good news on the economy meant the pound made gains against most major currencies.
William Nicholls, a dealer at Capital Spreads, said: “We are seeing an increasing divergence between the sluggish FTSE 100 and other indices. The majority of this can be made attributable to the strengthening pound, which has a direct negative correlation on the FTSE, as all domestic currencies have on their respective indices.
“The earning power of the FTSE is far less in a currency-driven weak export market.”
UK consumer-oriented stocks were among those making gains. Retailer Sports Direct topped the blue chip risers’ board with a 3.5 per cent jump, adding 25p at 732.5p. And Lloyds Banking Group was higher to the tune of 2.8 per cent, or 2.06p, at 77.27p.
Energy engineer Amec was the biggest faller, down almost 4 per cent amid reports that it is stalking US peer Foster Wheeler. With analysts concentrating on the difficulties of such a deal, the shares slipped 46p to 1,124p, although they were also trading without rights to the latest dividend.
Newly listed Royal Mail looks on course for admission to the FTSE 100 in the reshuffle next month, as the shares climbed a further 6 per cent following strong half-year results. The group lifted 32p to 565p and is now 71 per cent higher than its starting point of 330p at its flotation last month – giving it a market valuation of more than £5.3 billion.