Lloyds leads FTSE 100 up as European stocks rally

Independent

6 hours ago

The FTSE 100 rebounded on Monday after Friday's tariff-related sell-off, lifted by gains in Lloyds Banking Group after a less severe than forecast motor finance ruling.
The FTSE 100 index closed up 59.72 points, 0.7%, at 9,128.30. The FTSE 250 ended 167.50 points higher, 0.8%, at 21,866.84, and the AIM All-Share closed up 1.73 points, 0.2%, at 758.89.
Lloyds rose 8.4% after a more favourable outcome to the probe into motor finance than had been expected.
The Financial Conduct Authority said it would consult on an industry-wide redress scheme for consumers 'treated unfairly' by car financing agreements, which it estimated will cost lenders between £9 billion and £18 billion.
The UK's financial regulator said it will publish the consultation by early October and finalise any scheme in time for people to start receiving compensation next year.
This followed Friday's ruling by the Supreme Court which partially overturned judgments that said controversial car loans were unlawful, although it did uphold one case, which allows the claimant to seek compensation on different grounds.
AJ Bell's Russ Mould said this was not a 'complete win' for the banking industry, but that the 'worst-case scenario, like a particularly ugly pothole, has been swerved'.
'Essentially, while this issue could still cause some damage, it looks unlikely to be a repeat of the PPI scandal which blighted the banking industry in the 2010s,' he said.
Other motor finance providers were in the green.
Close Brothers jumped 23%, S&U 8.6% and Vanquis Banking 6.7%.
'While the ultimate liability remains difficult to quantify, the industry-wide impact appears less severe than previously expected,' analysts at Peel Hunt said.
The pound rose to 1.3287 dollars late on Monday afternoon in London, compared to 1.3247 dollars at the equities close on Friday. The euro traded at 1.1568 dollars, higher against 1.1538 dollars. Against the yen, the dollar was trading lower at 147.30 yen compared to 148.12 yen.
In Europe on Monday, the CAC 40 in Paris climbed 1.1%, while the DAX 40 in Frankfurt rose 1.4%.
In New York, the Dow Jones Industrial Average was up 1.1%, the S&P 500 was 1.2% higher, and the Nasdaq Composite advanced 1.5%.
Tesla shares rose 1.6% as the electric vehicle maker handed its chief executive Elon Musk a 29 billion dollar pay package, as a lengthy legal battle over his compensation winds on.
The company said in a statement it will award an 'interim' distribution of 96 million Tesla shares to Mr Musk as it 'intends to compensate its CEO for his future services commensurate with his contributions to our company and shareholders'.
'We have recommended this award as a first step, 'good faith' payment,' it added when announcing the board's approval of granting new shares to Mr Musk.
'Retaining Elon is more important than ever before.'
Dan Ives at Wedbush Securities said: 'We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock. Musk remains Tesla's big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.'
The yield on the US 10-year Treasury was at 4.22%, trimmed from 4.24%. The yield on the US 30-year Treasury was unchanged at 4.81% from Friday.
Back in London, ConvaTec fell 1.4% as it said chief executive Karim Bitar will take a medical leave of absence for an undetermined period of time. Current chief financial officer Jonny Mason will assume the role of interim chief executive, and current group financial controller Fiona Ryder will become interim chief financial officer.
BP rose 1.8% despite a fall in the oil price after the news that Opec+ endorsed an additional 547,000 barrels per day production increase from September.
The London-based oil major maintained its aims to grow its global upstream production to 2.3 to 2.5 million barrels of oil equivalent a day in 2030, with the capacity to increase production out to 2035, after announcing a discovery at the Bumerangue exploration well, offshore Brazil.
Berenberg noted BP said it was the largest discovery it has made in 25 years.
In a blue-sky scenario, this discovery could have the potential to be 'highly material' for BP, Berenberg said.
'With such a large hydrocarbon column combined with a very large areal extent, the potential oil in place is very material,' the broker added.
BP reports half year results on Tuesday.
Brent oil was quoted lower at 69.20 dollars a barrel in London on Monday, down from 69.78 dollars late on Friday.
Stephen Innes at SPI Asset Management said the move by Opec+ completes the reversal of the 'massive' supply cut orchestrated in 2023, a full year ahead of schedule.
'This wasn't just symbolic; it was a power move aimed at clawing back market share and, intentionally or not, offering a tailwind to President Trump as he heads into a mid-term election cycle looking to keep pump prices tame,' he said.
The setup for the oil price heading into the fourth quarter is 'increasingly bearish,' Mr Innes said.
'While demand has weathered 2025 reasonably well so far, the tailwinds are weakening. China is wobbling, and non-Opec supply – particularly from US shale and Latin America – is swelling,' he noted.
Gold firmed to 3,372.82 dollars an ounce against 3,349.92 dollars.
The biggest risers on the FTSE 100 were Lloyds Banking Group, up 6.4 pence at 82.2p, St James's Place, up 55.5p at 1,353.5p, Endeavour Mining, up 84p at 2,424p, London Stock Exchange, up 294p at 9,608p and NatWest, up 15.4p at 527p.
The biggest fallers on the FTSE 100 were Haleon, down 8.4p at 357p, Rentokil Initial, down 7.2p at 354.4p, Next, down 200p at 12,130p, IMI, down 30p at 2,146p and Croda International, down 35p at 2,592p.
Tuesday's local corporate calendar has half-year results from oil major BP and miner Fresnillo plus full year results from Guinness owner Diageo.
The global economic calendar on Tuesday sees a slew of composite PMI readings, new car sales figures in the UK and trade balance data in the US.