Banks boost the FTSE as regulatory pressures ease

Banks boosted the FTSE in morning deals as they stormed higher amid yet more signs that regulatory pressure is set to ease.

The FTSE 100 was 32 points or 0.6%, higher at 5383.17 with banks adding 25 points. 

The mid-cap FTSE 250 was 43 points higher at 10182.

Overnight the US DJIA closed 101 points higher at 10525.43 and the S&P 500 added 12.3 points to 1115 after better than expected housing data and a bullish update from Fedex and as earnings across the Atlantic generally continue to beat expectations.

Back on this side of the Atlantic, banks led the risers with Barclays still buoyed by its high standing in the European bank stress tests and bolstered by overnight news that governments have agreed new watered down rules on bank funding.

Banks had been highly critical of the original version of the proposals by the Basel Committee saying the suggested tighter rules would hinder their ability to lend and would mean fierce competition for new funding.

Joshua Raymond, market strategist at City Index, said: 'It appears that the intensive lobbying activities of major European banks has worked and investors are hopeful that with there now being fewer locks and chains around bank activities than first feared, they may be able to report higher earnings to their shareholders.'

Barclays shares led the pack, up 21.15p at 336.8p, while Lloyds added 3p to 69p. RBS shares traded 2.03p higher at 48.72p - just shy of the 49.9p level where the taxpayer would break even on its investment in the banking group.

Strong numbers from investment banks UBS and Deutsche Bank also helped lift the sector.

BP shares were 2.3p higher at 419p as investors hope the change of management will be a turning point in the company's fortunes.

BP has taken a $32.2 billion charge to cover the costs of the Gulf of Mexico spill. That meant the group reported the worst loss in UK corporate history at just under $17 billion

But BP said it plans to offset some of the cost of its spill against its US tax bill and will receive a $10 billion tax credit. It said its tax bill in the UK will also be reduced.