Footsie rises as financials rally on speculation Athens will avoid default

FTSE: 5,766.88 (+44.54) Mid-250: 11,606.38 (+57.32) Small Cap: 3,226.46 (–0.45):UK STOCKS rose for a third day yesterday, led by a rally in banks, as investors speculated that Greece will avoid a default and Standard Chartered said it will post double-digit growth.

Royal Bank of Scotland and Barclays gained in London trading, while mining companies climbed with metal prices.

The benchmark FTSE 100 Index increased 44.54, or 0.8 per cent, to 5,766.88 at the close in London.

The gauge has lost 5.3 per cent from this year’s peak in February amid mounting concern that Greece will default on its debt.

“Traders bought into risky asset classes on optimism that Greece would secure the funding it requires,” said Joshua Raymond, chief market strategist at City Index in London.

“The financial markets appear relatively calm and optimistic that Greece’s new austerity measures will pass a vote in parliament,” he said.

UK stocks rose as Greek lawmakers met to debate budget cuts that the European Union has made as a condition of providing further aid to the country.

RBS rallied 4.2 per cent to 36.6p, the first advance in five days.

Barclays climbed 1.9 per cent to 242p and Lloyds Banking increased 1.8 per cent to 44.2p.

Banks also advanced after Standard Chartered, the UK’s third-largest bank by market value, said it may post “double- digit” growth in first-half revenue and pretax profit as it tightened control on expenses. The stock rose 2.7 per cent to 1,581p.

Kazakhmys increased 2.9 per cent to 1,300p as copper rose for the second time in three days in London.

Vedanta Resources advanced 3.5 per cent to 1,972p and Antofagasta rose 1.6 per cent to 1,303p.

Severn Trent gained 2.3 per cent to 1,448p, while United Utilities advanced 0.9 per cent to 592.5p.

Legal and General Prudential rallied 2.6 per cent to 705.5p after Goldman Sachs raised its recommendation for the insurer to “buy” from “neutral”.

Smiths, the world’s biggest maker of airport-security scanners, surged 3.8 per cent to 1,149p.

Crystalox Solar sank 43 per cent to 22.3p after the UK’s biggest maker of silicon wafers said it will report its first operating loss in the second half should market conditions not improve. – (Bloomberg)