BANK stocks led a surge for the FTSE 100 Index after new standards on financial health from the Bank of England were met with relief by lenders.
Their progress came during a positive session for global markets after the Bank of Japan announced surprise stimulus measures to boost the country's economic recovery.
Japan's Nikkei stock index closed almost five per cent higher, while the FTSE 100 Index was one per cent stronger, up 82.9 points at 6546.5, after the Dow Jones Industrial Average set a new intra-day high during London trading hours.
Banks dominated the risers board as policymakers said lenders will be required to hold more capital to guard against the risks of bad loans from 2019, but the proposals were seen as being at the lower end of expectations.
Barclays shares rose eight per cent - up 18.25p to 240.8p - as it welcomed the result of the review by the Bank of England's Financial Policy Committee. The lender's current leverage ratio of 3.5 per cent is lower than rivals so it looked likely to be more affected if the rules had been tighter.
Royal Bank of Scotland was also higher after it reported profits of £1.27 billion for the third quarter - the first time since the financial crisis that the bank has posted a profit for three quarters in a row.
Shares were 22.7p higher at 388p - a rise of six per cent even though the state-backed bank wrote off another £780 million for past misconduct issues, including £400m to settle foreign exchange rate rigging allegations.
Lloyds Banking Group lifted 1.96p to 77.1p and HSBC was 10.4p higher at 639.5p.
The pound was higher against the euro at 1.28 after eurozone inflation of just 0.4 per cent in October added to fears that the region could fall into deflation without drastic stimulus measures from policymakers. Sterling was slightly lower against the dollar, at 1.60.
Elsewhere in the FTSE 100, British Airways owner International Airways Group rose 18.5p to 409.2p as it upgraded its forecasts in the wake of a sharp rise in profits for the quarter to September 30.
In the FTSE 250 Index, Superdry fashion retailer SuperGroup dived six per cent or 55p to 830p after it issued another profits warning - due to the impact of warm weather on clothing demand.
Back in the top flight, shares in Direct Line Insurance were two per cent lower after the motor and home policies specialist said its markets remain highly competitive, with gross written premiums five per cent lower for the first nine months of the year.
The biggest risers were Barclays up 18.3p at 240.8p, Royal Bank of Scotland up 22.7p at 388p, International Airlines Group up 18.5p at 409.2p and St James's Place up 32.5p at 745p.
The biggest fallers on the FTSE 100 Index were Randgold Resources down 101p at 3678p, Fresnillo down 19p at 697.5p, Direct Line down 5.5p at 276p and TUI Travel down 2.2p at 398.6p.
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