By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Banks and mining firms led U.K. stocks
higher on Monday as investors welcomed the move by U.S. former
Treasury Secretary Lawrence Summers to drop out of the race to
become new Federal Reserve chairman.
The FTSE 100 index added 0.8% to 6,639.09, on track for its
highest close since early August.
The gain came as both the broader European market and U.S. stock
futures moved higher on news Lawrence Summers withdrew from
consideration to be the next Fed boss as he "reluctantly concluded
that any possible confirmation process for me would be
acrimonious."
Many analysts considered Summers, previously seen as the front
runner for the post, as a relatively hawkish pick for the central
bank's top post and as more skeptical toward quantitative easing
than Janet Yellen, the Fed's vice chairwoman. The move potentially
paves the way for Yellen to head the Fed, and she is expected to
scale back the central bank's quantitative-easing program less
aggressively than Summers would have.
Banks benefited from the upbeat sentiment, with shares of Royal
Bank of Scotland Group PLC (RBS) up 0.8% and heavyweight HSBC
Holdings PLC (HBC) 0.6% higher. Barclays PLC (BCS) gained 1.8%
after Nomura lifted the bank to buy from reduce, according to Dow
Jones Newswires.
Mining firms gained as most metals prices moved higher,
supported by a weaker dollar. Shares of Antofagasta PLC rose 3%,
BHP Billiton PLC (BHP) added 1.6% and Rio Tinto PLC (RIO) gained
1.2%.
Vedanta Resources PLC picked up 2.2% after the miner appointed
Tom Albanese as chairman of its subsidiary, Vedanta Resources
Holdings Ltd. Albanese stepped down as Rio Tinto's chief executive
and earlier in the year.
But shares of miner Fresnillo PLC tanked 14%. Max Cohen,
financial sales trader at Spreadex, said in a note that the big
loss came as "investors weighed up the prospect of a big levy on
the mining sector in Mexico."
"All of Fresnillo's seven operational mines are in Mexico,
leaving it heavily exposed to such an increase in its tax burden,"
he added.
Also on the decline, shares of Wolseley PLC dropped 0.8% after
Credit Suisse cut the distributor of heating and plumbing products
to neutral from outperform.
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