FTSE 100 close: HSBC and Lloyds lead gains on London index as Turkish lira slides after inconclusive election

London’s FTSE 100 kicked off a new week in decent style today, led higher by Britain’s largest banks clocking strong gains.

The capital’s premier index advanced 0.30 per cent to 7,777.69 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, climbed 0.37 per cent to 19,258.75 points.

Lenders were among the best performing sectors in the City on the first trading day of a new week, with HSBC, Lloyds Bank and NatWest all up more than one per cent and trading close to the top of the index.

The gains came after the Bank of England last week hiked interest rates for the twelfth time in a row to 4.5 per cent, their highest level since October 2008.

Higher borrowing costs tend to lift market sentiment toward banks as they allow them to charge more for loans, which widens their net interest margin, which is the difference between what rate banks give savers and make borrowers pay.

European stocks also received a boost from a positive overnight session in Asia, analysts said.

“Stocks in Europe however made broad gains in early trading on Monday, following a broadly positive Asian session that saw the Nikkei 225 hit its highest in 18 months,” Neil Wilson, chief market analyst at Finalto, said.

Consumer-focused and supermarket stocks held back the FTSE 100’s ascent, likely triggered by investors fleeing them after Britain’s competition regulator the Competition and Markets Authority said it is investigating whether food producers are engaged in so-called “greedflation”. 

Online supermarket and middle class favourite Ocado dropped 2.3 per cent and to the bottom of the index, while Britain’s largest supermarket, Tesco, shed 0.91 per cent. Sainsbury’s also came under selling pressure.

Electronics retailer Curry’s lifted its profit outlook this morning, boosting its shares nearly four per cent.

The pound strengthened around a halve a percentage point against the US dollar. 

The Turkish lira was highly volatile against the world’s major currencies after yesterday’s inconclusive election triggered a re-run between Tayyip Erdoğan and Kemal Kılıçdaroğl.