London markets boosted by rallying bank stocks as rate hike bets lift sentiment toward sector

A rally among banks boosted London markets this morning as sentiment toward the sector improved on strengthening prospects of the Bank of England hiking rates.

The capital’s premier FTSE 100 index climbed 0.49 per cent 7,258.91 points, while the mid-cap FTSE 250 added 0.30 per cent to 23,561.92 points.

The likes of Barclays, NatWest and HSBC were among the best performers on the FTSE 100, all up more than 1.10 per cent.

Banks have been squeezed by the prolonged low interest rate environment, particularly NatWest, who has one of the lowest net interest margins in the sector.

However, soaring inflation has raised the prospect of the Old Lady raising rates 15 basis points at its meeting on December 16.

Delivery company Royal Mail was the top performer on the premier index, advancing 4.51 per cent during the first couple of hours of trading.

Miner Polymetal topped the fallers column, having more than 2.90 per cent shaved off its share price.

Meanwhile, on the mid-cap FTSE 250 index, retailer Marks and Spencer was a bright spot, gaining 2.95 per cent after reports emerged this morning US private equity giant Apollo is mulling a takeover of the British high street stalwart.

The pound lost ground on the greenback, weakening 0.12 per cent to $1.3437.