FTSE 100 edges up but Admiral share price hit as investors await Budget and interest rate decisions
The share price of one of the UK's largest insurers was hit in early trading after it emerged over the weekend that the chancellor may drop a tax bombshell on the sector when he delivers his Budget later this week.
Admiral Group fell 1.6 per cent to 1,884.5p in early trading, after reports suggested George Osborne will raise the basic rate of Insurance Premium Tax (IPT) from 9.5 per cent to 12.5 per cent. The FTSE 100 was up 0.5 per cent at 6,169.8 points.
Investors' thoughts were also turning to interest rate decisions from the Federal Reserve and Bank of England, due on Wednesday and Thursday.
"Investors are banking on hopes the central banks around the world will… not make any irrational decision which will injure the market confidence," said Naeem Aslam, chief market analyst at Avatrade.
"The European Central Bank president, Mario Draghi confirmed last week that he has the ability to do whatever it takes by adding corporate bonds to his shopping list and this has pushed the banking sector higher which was badly battered due to the consistent selling pressure."
Old Mutual was the biggest riser, with shares rising 2.4 per cent to 186.3p. That's a radical u-turn from Friday, when shares fell after the company unveiled plans to split into four.
Meanwhile, the German Dax jumped almost two per cent to top 10,000 points for the first time in two months in the first minutes of trading. That suggested investors were shrugging off uncertainty after Chancellor Angela Merkel's party suffered a dramatic setback as the anti-immigration Alternative fuer Deutschland party made huge gains in regional elections.