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FTSE 100 Posts 2.4% Bounce

MONDAY MARKET UPDATE: Nearly all FTSE 100 companies pushed higher in trading based on renewed optimism over the US fiscal cliff dilemma

Alanna Petroff 19 November, 2012 | 6:38PM

UK, European and US markets all rallied on Monday, with investors becoming increasingly optimistic that US policymakers will be able to make progress on the upcoming US fiscal cliff dilemma

"The fiscal cliff and the inability of the US to reach some sort of resolution to the problem has been playing on investors’ minds for quite some time," said Fiona Cincotta, a market analyst at City Index. "It would look like some common ground has been found over the weekend and there have been some encouraging developments. This was the news that greeted the markets this morning and they rallied accordingly," she said.

"Investors were keen to buy back into the markets and increase the risk profiles in their portfolios, picking up stocks that had sold off aggressively over the past two weeks, with focus particularly on the mining, energy and financial sectors," she said.

Barclays (BARC) climbed to the top of the FTSE 100 leaderboard as shares made a nearly 7% gain. HSBC Holdings (HSBA) and Royal Bank of Scotland (RBS) also made significant gains foward.

Broker upgrades also helped Eurasian Natural Resources (ENRC) climb higher during the course of the trading day, explained Cincotta.

Optimism over the bailout process in Greece also helped to boost the market mood, said David Madden, a market analyst at IG.

"Everybody loves to buy cheap stocks but traders need the right motive and the likelihood of Greece receiving the next tranche of the bailout was the perfect excuse. Members of the Troika will argue among themselves about the terms of the deal for Greece, but when push comes to shove Athens will be given the money; it's hardly a monetary union if one member is allowed to go bust," said Madden.

Over the course of the day, the FTSE 100 index rallied by 2.4% to close at 5,738. The FTSE 250 index also surged ahead by 1.5% to close at 11,745. 

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About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.