TUESDAY MARKET CLOSE: FTSE rebounds as central banks act

The benchmark FTSE 100 Index staged a rebound from its recent falls as emerging economies started to get a grip on their currency turmoil.

The index added 21.67 points to 6,572.33 as the Indian central bank surprised markets by raising rates to defend the rupee, amid expectations that its Turkish counterpart could follow suit overnight. The more domestically focused FTSE 250 enjoyed a much bigger lift thanks to the positive news on UK economic output and climbed more than 1 per cent, up 187.62 points at 15,715.83.

William Nicholls, junior dealer at London Capital Group, said: “A week ago the FTSE 100 was within touching distance of all time highs, but do these declines suggest an unease about the future earnings ability of our companies in the long term? Investors don’t think so as they use these levels as a good price to get back into equities.”

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Banking stocks were in demand as Barclays and Lloyds both announced cost-cutting measures. Lloyds said it was to shed a further 1,080 jobs across its retail, risk, operations and commercial banking divisions with another 300 posts being moved to other employers.

Meanwhile it was reported that Barclays was planning more job losses in its investment banking arm to cut costs. Barclays improved 4p to 273.3p and Lloyds Banking Group was ahead 2.4p to 82.8p.

That helped Royal Bank of Scotland shares rally 11.7p to 343.9p, after falling in the previous session on its announcement that it will have to set aside around £3 billion to cover litigation and customer compensation claims.

One of the worst performers was chip-maker Arm Holdings, which was being sold on the back of Monday night’s disappointing figures from Apple, one of its largest customers. Its stock slipped 13p at 944.5p.