London open: Stocks rise on stress-test results, but gains limited ahead of FOMC

UK markets opened slightly higher on Monday morning, with sentiment boosted by the weekend's news that most European banks had passed recent 'stress tests'.

The FTSE 100 was trading 0.1% higher at 6,396 within the opening hour, but had trimmed earlier gains which sent it to a high of 6,443.76.

The results from a European Central Bank study found that 25 of the Eurozone's 130 largest banks had failed a health check at the end of last year with a total capital shortfall of €25bn identified.

However, most have since repaired their finances, leaving only €10bn to be raised to plug holes in balance sheets, with Italian, Greek and Cypriot banks faring the worst. Nevertheless, this shortfall was much less than some had feared.

"Although 25 banks failed, half have already taken measures to shore up their capital and none of them were considered to pose any systemic risk," said Jonathan Sudaria from Capital Spreads.

Limiting upside on equity markets was nervousness ahead of the Federal Open Market Committee meeting on Wednesday, with policymakers expected to announce the end of quantitative easing in the States.

'There is still a lot of anxiety in the markets following that rapid sell-off earlier this month and I don't think it will take much from the Fed to spook everyone again," said analyst Craig Erlam from Alpari.

Travel stocks rise, banks fall

Travel stocks were among the best performers as investors continued to search for bargains after recent Ebola-related weakness in the sector. TUI Travel, Intercontinental Hotels, Carnival and IAG were putting in decent gains.

UK-listed banks were mostly lower despite the news that they all have passed the European stress tests. Lloyds, HSBC, Barclays and RBS were all in the red early on.

Lloyds was suffering the worst on reports that the lender will shortly unveil plans to close 200 branches. Sky News said that 9,000 jobs will be cut and the branches will be closed before the end of 2017.

Salamander Energy saw shares surge over 20% after the oil and gas group confirmed press speculation that it has received a takeover approach from Ophir Energy, the terms of which it is seeking to clarify. It also saw it has received an approach from another consortium of investors, though no action is being taken at this time.

Production volumes at Petra Diamonds reached a record in its first quarter, but the miner warned of a "seasonal softness" in the diamond market, causing shares to fall early on.

Anglo American edged higher after reporting the delivery of the first ore on ship from its Minas-Rio iron ore project in Brazil. Mining peer Randgold also gained after saying that "remedial measures" to overcome technical problems at its Tongon mine in north Côte d'lvoire have begun to bear fruit.

Market Movers
techMARK 2,697.24 -0.04%
FTSE 100 6,396.10 +0.12%
FTSE 250 15,084.20 -0.04%

FTSE 100 - Risers
TUI Travel (TT.) 374.10p +2.32%
InterContinental Hotels Group (IHG) 2,248.00p +1.40%
United Utilities Group (UU.) 849.50p +1.37%
Unilever (ULVR) 2,439.00p +1.37%
Carnival (CCL) 2,380.00p +1.32%
G4S (GFS) 253.90p +1.16%
Aviva (AV.) 512.50p +1.08%
SABMiller (SAB) 3,393.50p +1.07%
Imperial Tobacco Group (IMT) 2,607.00p +0.93%
Severn Trent (SVT) 2,006.00p +0.91%

FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 74.91p -2.36%
Aggreko (AGK) 1,504.00p -2.08%
Aberdeen Asset Management (ADN) 406.10p -1.31%
Fresnillo (FRES) 760.00p -0.85%
ARM Holdings (ARM) 810.50p -0.80%
Barclays (BARC) 224.65p -0.75%
St James's Place (STJ) 675.00p -0.74%
Rio Tinto (RIO) 2,993.00p -0.65%
Royal Bank of Scotland Group (RBS) 361.90p -0.63%
Petrofac Ltd. (PFC) 1,062.00p -0.56%

FTSE 250 - Risers
Renishaw (RSW) 1,636.00p +2.89%
Premier Farnell (PFL) 179.30p +1.88%
SSP Group (SSPG) 241.00p +1.69%
Entertainment One Limited (ETO) 305.70p +1.56%
Nostrum Oil & Gas (NOG) 670.00p +1.44%
IP Group (IPO) 190.10p +1.39%
Millennium & Copthorne Hotels (MLC) 573.00p +1.33%
Diploma (DPLM) 682.00p +1.26%
JD Sports Fashion (JD.) 430.10p +1.20%
Polymetal International (POLY) 473.80p +1.20%

FTSE 250 - Fallers
Ophir Energy (OPHR) 196.20p -3.21%
Petra Diamonds Ltd.(DI) (PDL) 169.90p -3.03%
Bank of Georgia Holdings (BGEO) 2,435.00p -2.79%
Hochschild Mining (HOC) 110.00p -2.65%
Zoopla Property Group (WI) (ZPLA) 205.30p -2.28%
Countrywide (CWD) 458.80p -1.76%
AO World (AO.) 164.80p -1.67%
Evraz (EVR) 127.90p -1.62%
JPMorgan Emerging Markets Inv Trust (JMG) 560.00p -1.58%
Vedanta Resources (VED) 817.50p -1.57%