London - Britain's top share index rose on Tuesday, reversing the previous session's underperformance, buoyed by a rise in the banking sector after it came through the Bank of England's stress tests unscathed.
Financial stocks added 17 points to a 32.63 point advance for Britain's FTSE, which was up 0.5 percent at 6,388.72 by 08h44 GMT.
Royal Bank of Scotland, Standard Chartered, HSBC, Barclays and Lloyds were up 1.4-3.0 percent in early deals, all among the top ten risers, after the results of the latest Bank of England tests.
While RBS and Standard Chartered both only passed thanks to steps they took to improve their capital ratios mid-way through the testing process, the other lenders tested did not have to take action.
Bank of England Governor Mark Carney said on Tuesday there was no new wave of capital regulation for banks in the pipeline, after the central bank set out plans to require them to hold extra capital.
“The banking sector generally seemed buoyed by the fact there were no failures this time around and, combined with a set of commodity stocks lifted by the not-good but not-bad either Chinese manufacturing data, (that) allowed the FTSE to jump,” Connor Campbell, financial analyst at Spreadex, said in a note.
Mining and oil shares rose slightly after a dip in the previous session. Copper and oil prices received support from a drop in the dollar, while China's factories slowed in November, underlining the headwinds facing demand.
The rise in the FTSE 100 saw it outpace euro zone shares, with the Euro STOXX 50 down 0.1 percent. That was a reversal of the previous session's move, when weakness in the euro had spurred the Euro STOXX 50 higher.
Among fallers, Babcock dropped to the bottom of the index, down 2.1 percent after a downgrade to “sell” from Citi.
“While Babcock is an excellent operator with solid barriers to entry in a growing market, we currently see too many risks for comfort around its shares' investment case,” analysts at the US bank said in a note.
REUTERS