London stock rally continues as Middle East concerns cool

The weaker pound and easing tensions in the Middle East helped drive the FTSE 100 towards record levels on Monday as it continued its recent purple patch.

The index fell just short of its highest intraday price on record - 8,047.06 - but reached a record closing level.

London’s top index finished 128.02 points, or 1.62%, higher to end the day at 8,023.87 after a fourth consecutive session of gains.

Axel Rudolph, senior market analyst at IG, said: “Following three straight weeks of falling prices, stock indices regained some lost ground at the start of the week as geopolitical tensions ease.

“A combination of a depreciating British pound - making UK stocks cheaper to buy for international investors and de-escalation in the Middle East propelled the FTSE 100.’’

Sterling was knocked by a slight improvement in interest rate cut expectations as easing oil prices gave some respite from concerns about another bout of energy price inflation.

Comments from deputy Bank of England governor Sir Dave Ramsden on Friday that UK inflation could be lower than expected over the next three years also impacted the currency.

The pound was down 0.2% at 1.234 US dollars and was 0.13% lower at 1.159 euros at market close in London.

Elsewhere in Europe, the other major markets had weaker sessions but made robust gains.

The German Dax index was up 0.7% at the close and the Cac 40 in France closed up 0.22%.