UK banking stocks up after Unicredit restructuring plan revealed
British banking stocks took the FTSE 100 higher on the back of news that Italian lender Unicredit will launch a major restructuring programme that would help remove billions of euros of bad debt from its balance sheet.
The UK's blue chip index closed higher by 1.1% or 78.15 points at 6,968.57 points, supported by lenders including Royal Bank of Scotland which rose 5.6p to 219.5p, Standard Chartered which jumped 15.2p to 668..2p, and HSBC which rose 8.3p to 660.1p.
It follows news that Italian banking giant UniCredit will axe 14,000 jobs by 2019 and make a 13 billion euro (£10.9 billion) cash-call to investors under a shake-up that will help remove nearly 18 billion euro (£15 billion) of bad debts from the books of the country's biggest bank.
It comes amid fears over Italy's banking sector following the country's No vote on constitutional reforms, which forced Prime Minister Matteo Renzi to resign and has led to worries that indebted lenders will struggle to find refinancing.
Across Europe, Italy's FTSE MIB closed higher by 2.5%, the French Cac 40 rose 0.9% and the German Dax rose 0.8%.
In currency markets, sterling was relatively flat against the dollar, giving up earlier gains to trade at 1.267. The pound was up 0.1% against the euro at 1.193.
The UK currency rose as high as 1.272 as the US dollar slumped on jitters over Wednesday's Federal Reserve interest rate decision.
It also made gains following UK Consumer Price Index inflation data for November, which hit its highest level in two-and-a-half years at 1.2%.
Michael Hewson, chief market analyst at CMC Markets UK, said: "This slow rise in inflation expectations is certainly helping feed the narrative that the Bank of England will struggle to ease policy further and raised the prospect that the next move in rates could well be up, and not down."
In oil markets, Brent crude rose 0.5% to 55.68 US dollars per barrel (£43.90). Gains were relatively muted as investors cashed in on major price increases a day earlier, which were fuelled by news that non-Opec producers would curb output to buoy prices.
In UK stocks, Lloyds Banking Group rose 1.17p to 62.55p as investors digested news that the Government had reduced its stake in the bailed-out bank to just below 7%.
More than £17.5 billion has been returned to Government coffers since the lender's £20.3 billion bailout at the height of the financial crisis that originally gave it a 43% stake in the lender.
Shares in newly-listed Hollywood Bowl fell 3.5p to 184.75p on news that costs associated with its stock market flotation dented full-year pre-tax profits, which fell £4.8 million to £2.6 million.
Bellway shares rose 36p to 2,426p as the housebuilder said customer demand for new homes was strong as sales reservations rose 7% to an average of 176 a week for the first 18 weeks of its new financial year.
The group has also resumed land buying after putting purchases on hold around the EU referendum.
Carpetright shares fell 15p to 185p as half-year pre-tax profits slumped 42% to £4.1 million. The retailer warned that the collapse in sterling and "uneven" consumer demand is denting its performance.
The biggest risers on the FTSE 100 were Rolls-Royce Holdings up 27p at 678p, ITV up 6.9p at 192.1p, BT Group up 12.75p at 359.45p, International Consolidated Airlines Group up 14p at 446.5p.
The biggest fallers on the FTSE 100 were Antofagasta down 36p at 738.5p, Tesco down 8p at 204.85p, BHP Billiton down 39p at 1,361.5p, and Anglo American down 31.5p at 1,178.5p.