By Carla Mozee, MarketWatch
U.K. stocks rallied Friday, and the pound surged, with financial
markets cheering indications the Conservative Party is on course to
take power in the U.K. parliament.
The U.K.'s FTSE 100 jumped 138 points, or 2%, to 7,026.34. Royal
Dutch Shell had the only listing to go lower, with A-class shares
down 0.9%.
Sector-wise, utilities climbed more than 4%, and financials were
up 3%, as were industrials.
Shares in bank major Lloyds Banking Group PLC topped the FTSE
100, with a gain of 7.3%. Utility Centrica PLC rose 6.8%, while
engineering support services company Babcock International Group
PLC added 6.6%.
Meanwhile, the mid-cap FTSE 250 gained 2.5% to 17,887.14. It
touched an intraday high of 18,161.18, surpassing the index's
all-time closing high of 17,875.11 notched on April 10.
On the 250 index, bookmaker Ladbrokes PLC shot up 9%, home
builder Berkeley Group Holdings PLC was up 9% and real-estate
agency Savills PLC rose 8%.
The majority of election results in Thursday's 650-seat contest
are in, and the BBC has projected the Conservatives could win 350
seats. That would give Prime Minister David Cameron an effective,
but razor-thin, majority in parliament.
The pound (GBPUSD) rallied to $1.5459 from $1.5247 late
Wednesday. Overnight, sterling hit as high as $1.5523, after a BBC
exit poll put the Conservatives in the lead by a surprisingly large
margin. That went against opinion polls that for weeks suggested
the election result would leave Conservatives and Labour neck and
neck, with a coalition the likely outcome.
"The Conservatives are seen as being more business friendly and
more importantly, offer continuity in a country that last year
experienced the fastest rate of growth," among the Group of Seven
advanced economies, said Craig Erlam, senior market analyst at
Oanda, in a note early Friday.
On the fixed-income market, bond prices rose, pushing the yield
on the 10-year U.K. Gilt down 14 basis points at 1.92%.
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