U.K. stocks surged the most since December 2008 after European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis.
Barclays Plc jumped 16 percent and Lloyds Banking Group Plc soared 14 percent as banking stocks climbed. Rio Tinto Group rallied 8.4 percent as commodities advanced.
The FTSE 100 climbed 264.4, or 5.2 percent, to 5,387.42. The measure tumbled 12 percent from this year’s peak on April 15 through May 7 amid concern that Greece’s debt crisis will spread through the region. The FTSE All-Share Index gained 5.2 percent today while Ireland’s ISEQ Index advanced 7.3 percent, its biggest gain since October 2008.
“This is seen as very positive to counteract any liquidity difficulties in wholesale money markets,” said David Buik, a markets analyst at inter-dealer broker BGC Partners in London.
Jolted into action by last week’s slide in the euro to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.
“The bank is walking a fine line in terms of its perceived credibility,” Elga Bartsch, the London-based chief economist at Morgan Stanley wrote in a report to clients today. The package is “larger than expected” and “constitutes a first move towards a fiscal union. If the emergency liquidity for the periphery is not complemented by aggressive austerity measures, the underlying solvency problems could continue to fester, and eventually spread to the core.”
The Bank of England today kept the key interest rate at a record low and left its bond-buying program unchanged.
Barclays rallied 16 percent to 329.6 pence. Lloyds surged 14 percent to 61 pence. Rio Tinto advanced 7.7 percent to 3,367.5 pence and Shell climbed 3.1 percent to 1,889.5 pence as metals and crude oil prices advanced.
Enterprise Inns Plc soared 14 percent to 122.1 pence after the Sunday Times reported that the U.K.’s second-biggest pub owner is close to agreeing on a plan to refinance a 1 billion- pound bank loan and may announce the deal as early as May 11, citing “insiders.”