London’s FTSE 100 Index has shrugged off concerns in the banking sector as a buoyant session on Wall Street helped blue chips make gains.
Lloyds Banking Group and Royal Bank of Scotland were among the heaviest fallers on the Footsie after a speech by the chairman of the Independent Commission on Banking (ICB) sparked fears over plans to overhaul the industry.
But the wider FTSE 100 closed 0.8% or 47.6 points higher at 5943.9, mirroring early session gains on US markets.
The Dow Jones Industrial Average rose 0.8%, boosted by technology stocks as Intel revealed plans to increase its dividend.
McDonald’s released figures revealing a 2% rise in fourth quarter net income – in line with market expectations, but growth had slowed on the previous three months as major markets were hit by poor weather.
The pound fell back against most major currencies as traders took profits off the table after last week’s surge on interest rate hike speculation. Sterling fell to 1.17 euros, although it held firm at 1.60 US dollars.
Lloyds suffered the biggest loss on the Footsie in a poor session for banks following a speech by ICB chairman Sir John Vickers.
He appeared to rule out a full-scale break-up of the banks, but mulled plans to ring-fence their retail operations from investment banking and said important institutions should be required to hold more core capital than in the current regime.
Lloyds closed more than 3% lower or 2.3p to 65.1p, while Royal Bank of Scotland dropped 0.9p to 44.1p and Barclays fell 0.4p to 300.5p.
The latest political turmoil in Ireland, where the coalition government is on the brink of collapse, added to fears over the sector’s exposure to the country and the eurozone debt woes in general.