US bank deal helps lift London stocks after a week of troubles

The index rose another 1.1% as markets in Europe opened on Friday after a turbulent week.

But it’s still well off recent highs, and compared to a week ago, the index has lost more than 3% of its value as global bank stocks plummeted.

The surge as markets opened on Friday came after a group of large US banks joined forces on Thursday night UK time to put together a funding package for First Republic Bank – a mid-tier lender in the US.

First Republic shares had fallen nearly three-quarters in just a week as they rebounded from the collapse of three other banks in the US and weakness in Credit Suisse, which forced the country’s central bank to give it a £45 billion funding package to extend.

On Thursday night, JP Morgan Chase, Citigroup and other big US companies deposited $30 billion (£25 billion) with the troubled lender.

“Investors regained composure after the turmoil of the past few days, helped by further action to contain contagion in the banking sector,” said Richard Hunter, head of markets at Interactive Investor.

He added: “The general waves of relief also spilled onto UK shores, with the main indices reflecting a more positive sentiment for now.

“Banks have recouped some of last week’s losses, although there is still work to be done before contagion can finally be cleared and stock prices can return to previous levels.

“Meanwhile, commodity stocks also benefited from renewed strength in oil prices, although that price is still down 13% this year.”