London shares closed higher on Monday as the pound plunged against the dollar and euro in the wake of Moody’s credit downgrade, making UK shares cheaper for overseas investors.
The benchmark FTSE 100 index ended the day 19.67 points or 0.31 percent higher at 6,355.37.
Sterling sank by more than a cent against the dollar and by a eurocent versus the eurozone single currency as markets had their first chance to react to to Moody’s removal of Britain’s triple A credit rating late on Friday.
“Some investors have taken Moody?s announcement to have positive consequences for the UK,” said Shavaz Dhalla, a financial trader at Spreadex.
“The downgrade has led to further losses in sterling which will help support export-led companies which is a key factor some UK policy makers believe will aid in the rescue of the economy,” the trader said.
“Whether such companies will have the resources to help exploit a weak sterling for a competitive advantage is perhaps another issue,” Dhalla noted.
BP shares climbed 1.6 percent to 451.15 pence as a trial began in the US to determine how much more the British energy giant should pay for the devastating 2010 Gulf of Mexico oil spill.
According to the Wall Street Journal, US authorities plan to propose a $16 billion settlement for civil claims.
BP has already resolved thousands of lawsuits linked to the deadly disaster out of court, costing the firm billions of dollars.
Mining and medals related stocks rose, with Antofafgasta adding 3.04 percent to 1,117 pence, Glencore gaining 2.24 percent to 381.95 pence and Polymetal rising 2.19 percent to 1,004 pence.
Royal Bank of Scotland jumped 2.84 percent to 354.80 pence as investors studied forecasts for the state-rescued bank’s results later this week.
Lloyds Group, Britain’s other bailed-out bank, will also release figures later in the week. Its shares edged up 0.13 percent to 54.93 pence on Monday.
Shares in Pearson dropped 3.7 percent to 1,171 pence after the British publisher and owner of the Financial Times newspaper said annual net profit plunged by 66 percent in 2012 as its print business came under pressure from fast-growing digital media.
Pearson said it would restructure aspects of the company “to strengthen dramatically” its position in digital education services and emerging markets.
Other London-listed companies planning news releases this week include hotel and restaurant operator Whitbread, publishing a trading update on Tuesday.
Downton Abbey broadcaster ITV sends out its full year results on Wednesday, followed by British American Tobacco and RBS on Thursday, then Lloyds on Friday.
On the currency markets, sterling tumbled to $1.5120 at 5:26 pm from $.15249 on Friday evening and and to 1.1471 euros to 1.1577 euros before the weekend.
London shares rise as weaker pound tempts buyers
