By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- The U.K.'s FTSE 100 index closed at the
highest level in six weeks on Monday, as investors welcomed the
move by U.S. former Treasury Secretary Lawrence Summers to drop out
of the race to become the next Federal Reserve chairman.
The benchmark index added 0.6% to 6,622.86, posting its highest
close since early August.
The gain came as both the broader European markets and U.S.
stocks moved higher on news that Summers withdrew from
consideration to be the next Fed boss as he concluded that any
possible confirmation process for 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 chair. 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 1.4% and Lloyds Banking Group
PLC (LYG) 1% higher. Barclays PLC (BCS) gained 1.3% 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 3.9%,
BHP Billiton PLC (BHP) added 1.1% and Rio Tinto PLC (RIO) gained
1.3%.
Vedanta Resources PLC gained 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 earlier
in the year.
But shares of miner Fresnillo PLC fell 13%. Max Cohen, financial
sales trader at Spreadex, said in a note that the losses 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.
Shares of GlaxoSmithKline PLC (GSK) fell 0.5% after Barclays cut
the drug maker to equal weight from overweight.
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