FRIDAY MARKET CLOSE : Banking shares drive market surge

Bank stocks led a surge for the FTSE 100 yesterday after new standards on financial health from the Bank of England were met with relief by lenders.

Their progress came during a positive session for global markets after the Bank of Japan announced surprise stimulus measures to boost the country’s economic recovery.

Japan’s Nikkei stock index closed almost 5 per cent higher, while the FTSE 100 was 1.3 per cent stronger, up 82.92 points at 6,546.47, after the Dow Jones Industrial Average set a new intra-day high during London trading hours.

Tony Cross, market analyst, Trustnet Direct, said: “There’s been little in play to frighten London equity traders on the last day of October, with the vast majority of blue chips stocks trading higher at the close.”

Banks dominated the risers’ board as policymakers said lenders will be required to hold more capital to guard against the risks of bad loans from 2019, but the proposals were seen as being at the lower end of expectations.

Royal Bank of Scotland rose 22.7p higher at 388p – an increase of 6.2 per cent – and Barclays shares rose 8 per cent – up 18.25p to 240.8p. Lloyds Banking Group lifted 1.96p to 77.1p and HSBC was 10.4p higher at 639.5p.

Shares in Direct Line Insurance were 2 per cent lower after the motor and home policies specialist said its markets remain highly competitive, with gross written premiums 5 per cent lower for the first nine months of the year.

The company remains on track to meet its financial targets for 2014 but a decline of 5.5p to 276p made the stock one of a small number of fallers in the FTSE 100.

The biggest risers in the top flight included wealth manager St James’s Place, up 32.5p at 745p, while the biggest fallers on the Footsie were Randgold Resources down 101p at 3,678p, Fresnillo off 19p at 697.5p and TUI Travel, which was 2.2p lower at 398.6p.