FTSE 100 and sterling surge after poll result

The FTSE 100 Index surged by as much as 2 per cent today after a better-than-expected election performance for the Conservatives cheered the City.

London’s top-flight climbed by nearly 150 points in early trading, adding almost £40 billion to its total value as investors welcomed the prospect of a smooth transition for David Cameron into a second term in Downing Street.

Scottish Gas owner Centrica was a big winner, rising more than 7 per cent after Labour’s defeat dispelled the possibility of an energy price freeze and tighter regulation.

Housebuilders such as Barratt and Persimmon also performed strongly, as did UK-focused banks including state-backed lenders Lloyds Banking Group and Royal Bank of Scotland.

Emerging poll results also boosted sterling, with the pound climbing to its highest level against the US dollar since late February – though some of the gains later faded – and also ahead against the euro.

Vicky Redwood, chief UK economist at Capital Economics, said: “With the Conservatives on course to achieve – or at least get very close to – a majority, the UK general election result is a surprisingly market-friendly outcome.

“The result removes the risk that the economy suffers a prolonged period of political uncertainty – indeed, the pound has risen by about 2 per cent against the euro.”