London close: Stocks rise as confidence returns to banking plays

The FTSE 100 was up by 0.89% at the close, reaching 7,401.03, while the FTSE 250 climbed 0.71% to 18,758.58.

That recovery was due in part to a rebound in bank shares, after Credit Suisse announced that it would be taking a CHF50bn loan from the Swiss National Bank.

Suisse's shares had fallen sharply on Wednesday, leading to a sell-off in markets worldwide.

However, the bank took measures to reassure investors on Thursday, announcing that it would be making cash tender offers for several of its senior debt securities, including both dollar- and euro-denominated bonds.

Credit Suisse's CEO, Ulrich Koerner, described the measures as "decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders."

He emphasised the bank's commitment to becoming "a simpler and more focused bank built around client needs."

In currencies, sterling saw gains against its major pairs, rising 0.44% on the dollar to last trade at $1.2110, and growing 0.08% on the euro to €1.1409.

“European markets are on the front foot as we close out a day that has seen both the Swiss and European Central Banks step in to ease contagion concerns in the banking sector,” said IG senior market analyst Joshua Mahony.

“The $53.7bn SNB liquidity pledge provided to the beleaguered Credit Suisse bank helped lift sentiment into the ECB rate decision, with Cristine Lagarde doing her best to allay fears that others may be in trouble.”

Mahony said part of the newfound confidence came in response to Lagarde’s insistence that the 2008 crisis had resulted in a “significantly more stable” and better-equipped financial services industry.

“Nonetheless, the gains seen today should continue to be taken against the backdrop of significant risk and uncertainty, with ECB vice-president Luis de Guindos recently warning that some EU banks will be adversely affected by higher interest rates.”

ECB goes ahead with 50-basis point rate rise

In economic news, the European Central Bank (ECB) went ahead with raising short-term interest rates by 50-basis points, despite concerns over the banking sector.

Some analysts had feared that not following through with its recent guidance might be seen as an admission of serious concern around lenders.

In its decision, ECB argued that the rate hike was in line with its goal of a "timely return" of inflation to its 2.0% medium-term target.

The bank did, however, stress the importance of its data-dependent approach and acknowledged that there was an "elevated" level of uncertainty.

“The euro area banking sector is resilient, with strong capital and liquidity positions," the ECB said in its statement.

“In any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.”

Across the pond, tightness in the jobs market persisted, with the latest data showing initial unemployment claims falling by 20,000 over the week ended 11 March to reach 192,000.

The four-week moving average for claims, which smooths out weekly variations, dipped by 750 to 196,500.

Meanwhile, secondary jobless claims fell by 29,000 over the week ended 4 March to reach 1.684m.

Elsewhere, housebuilding activity in the US saw an uptick last month, although the details of the data were less impressive.

Housing starts rose by 9.8% month-on-month in February to reach an annual rate of 1.45 million, beating expectations.

However, starts on single-family homes were up by a more modest 1.1% to 830,000.

Building permits also increased, jumping by 13.8% to 1.339 million, with a 7.6% rise in permits for single-family homes.

Finally, manufacturing activity in the US mid-Atlantic region failed to rebound as anticipated in March.

The Federal Reserve Bank of Philadelphia's factory sector index edged up from -24.3 in February to -23.2 in March, which was worse than the -14.5 that economists had predicted.

Significantly, the sub-index tracking new orders fell sharply from -13.6 to -28.2.

Bank recover after Wednesday’s sell-off

On London’s equity markets, banks recovered after the news of Credit Suisse's loan, with Lloyds Banking Group up 3.15%, Barclays up 2.99%, and HSBC Holdings up 1.77%.

Rentokil Initial surged by 10.06% after posting strong full-year profits and raising its dividend.

OSB Group and Helios Towers also saw gains following their earnings reports, with OSB up by 9.38% and Helios up by 3.06%.

Investment company Bridgepoint Group advanced by 4.97% after reporting an increase in full-year profits and revenue.

Meanwhile, Investec Group was up by 2.64% after announcing that it expects to report an increase in full-year operating profit.

On the downside, real estate agent Savills fell by 3.11% after warning of a tough first half of the year and reporting a fall in annual profits.

Electricals retailer Currys saw a bigger fall, with a 9.29% drop after replacing the chief executive of its Nordics division and warning that group profits will be at the lower end of expectations.

Several other companies were in the red after trading without entitlement to the dividend, including M&G, NatWest Group, Crest Nicholson Holdings, Dunelm Group, Anglo American, and Spirent Communications.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,410.03 0.89%
FTSE 250 (MCX) 18,758.58 0.71%
techMARK (TASX) 4,516.61 0.90%

FTSE 100 - Risers

Rentokil Initial (RTO) 553.60p 10.06%
Abrdn (ABDN) 211.00p 5.58%
Flutter Entertainment (CDI) (FLTR) 13,830.00p 3.60%
Informa (INF) 678.20p 3.35%
Schroders (SDR) 450.90p 3.18%
Lloyds Banking Group (LLOY) 47.46p 3.15%
Admiral Group (ADM) 1,954.50p 3.06%
Convatec Group (CTEC) 229.40p 3.05%
Barclays (BARC) 142.38p 2.99%
JD Sports Fashion (JD.) 166.70p 2.96%

FTSE 100 - Fallers

M&G (MNG) 181.65p -8.44%
Fresnillo (FRES) 697.80p -5.40%
SEGRO (SGRO) 755.20p -3.50%
Anglo American (AAL) 2,479.00p -3.15%
Shell (SHEL) 2,209.00p -2.24%
British Land Company (BLND) 399.90p -1.72%
Endeavour Mining (EDV) 1,718.00p -1.66%
Vodafone Group (VOD) 92.67p -1.44%
Imperial Brands (IMB) 1,862.50p -1.14%
Rio Tinto (RIO) 5,281.00p -0.99%

FTSE 250 - Risers

OSB Group (OSB) 520.00p 9.38%
4Imprint Group (FOUR) 4,790.00p 5.51%
Bridgepoint Group (Reg S) (BPT) 215.40p 4.97%
Dr. Martens (DOCS) 134.00p 4.44%
Kainos Group (KNOS) 1,293.00p 4.19%
Synthomer (SYNT) 134.80p 4.09%
Genuit Group (GEN) 266.00p 3.91%
Britvic (BVIC) 860.50p 3.80%
AJ Bell (AJB) 346.00p 3.72%
easyJet (EZJ) 487.30p 3.64%

FTSE 250 - Fallers

Currys (CURY) 65.20p -9.29%
National Express Group (NEX) 120.30p -6.31%
Centamin (DI) (CEY) 100.55p -6.12%
Spirent Communications (SPT) 168.50p -5.08%
Crest Nicholson Holdings (CRST) 210.80p -3.83%
Balfour Beatty (BBY) 335.40p -3.62%
Hammerson (HMSO) 23.67p -3.55%
Dunelm Group (DNLM) 1,133.00p -3.41%
TI Fluid Systems (TIFS) 101.20p -3.25%
Derwent London (DLN) 2,388.00p -3.16%