FTSE 100 hits new peak on Greek hopes and despite election uncertainty

Leading shares hit a new peak - just - helped by a rise in banking and mining shares as well as intriguing developments in Greece which appeared to be taken positively. But a poll showing a 6 point lead for the Conservatives in next week’s general election took some of the shine off.

The FTSE 100 finished 33.28 points higher at 7103.98, around 8 points above the previous record close reached on 15 April. But it closed well below the 7122 level it reached earlier in the day, before news of the UK poll emerged.

Events in Greece provided much of the impetus for the day’s rise. Investors seemed to welcome news that the country had reshuffled its team to negotiate with its creditors following Friday’s fractious meeting, with embattled finance minister Yanis Varoufakis said to be taking a less prominent role. Meanwhile a report in Germany’s Bild suggested Greece would present a new list of reforms on Wednesday, including abandoning plans to raise the minimum wage.

These reports sent the Athens market and Greek bonds climbing, while other European markets also moved higher, with Germany’s Dax up 1.9% and France’s Cac closing 1.3% higher. But Joshua Mahony, market analyst at IG, said:

The new negotiating team will look different, but should they employ any particularly different tactic, they would be ignoring the very reason they are currently in office, namely their anti-austerity platform. For this reason, I expect any temporary jubilance in the markets to be just that.

There were also other concerns. Apart from the uncertainty over the forthcoming UK election, investors were also nervous about this week’s US Federal Reserve meeting, with analysts still unsure about when the central bank is likely to raise interest rates.

Among the risers HSBC was 19.6p higher at 649.3p after Friday’s news it was considering moving its headquarters from the UK, which if it happened would mean the bank not paying the full cost of the bank levy.

It was also lifted by suggestions over the weekend that it could spin off its UK retail banking business for about £20bn although Credit Suisse said: “Spinning off UK retail would give up a significant source of earnings.”

The HSBC rise added nearly 15 points to the top index.

Meanwhile Standard Chartered, which is also now the suject of speculation it could move away from the UK, was up 45.5p at 1115.5p.

With metal prices including iron ore recovering ground, the mining sector also moved higher. Anglo American added 21.5p to 1103.5p, Rio Tinto rose 10.5p to £30.14 and BHP Billiton was 5p better at £15.69.

Elsewhere Sports Direct International put on 12.5p to 625.5p ahead of a Channel 4 investigation, as analysts at RBC moved from underperform to sector perform. The bank was also positive on SuperGroup, up 46.5p to 991p.

Tullow Oil lost early gains, ending down 7.7p at 410.3p despite a ruling that development at its Ten oil field could continue despite a dispute between Cote D’Ivoire and Ghana. But no new drilling can take place in the dispute area while legal hearings are held, which has been taken as a negative by investors.

Serco slipped 2.1p to 132.8p after further reported problems at the Yarl’s Wood immigration detention centre which the outsourcing group runs on behalf of the Home Office.

But employment group Staffline soared 19% to 955p as it reported a strong start to the year and said it was paying £34.5m to acquire training group A4e.