(Reuters) - Britain’s FTSE 100 kicked off a week of key Brexit votes in parliament on a positive note, with financial stocks shrugging off fears of a potentially disruptive no-deal divorce while mining companies found their support from higher zinc prices.
The main index added 0.4 percent, shaving off some earlier gains as sterling strengthened, and the FTSE 250 was 0.2 percent higher.
After trading initially in the red, the pound gained ground as investors awaited parliamentary votes on Prime Minister Theresa May’s Brexit deal that could decide on what terms - if at all - Britain leaves the European Union in less than three weeks.
Ireland’s main index, seen as a gauge of Brexit jitters, erased earlier losses to end 0.6 percent higher.
May’s spokesman said talks to secure changes to her Brexit deal were at a delicate stage and talks were continuing at a technical level before Tuesday’s parliamentary vote on the agreement.
“As unpopular as May’s withdrawal agreement is, the option of a no-deal (Brexit) is far more unpopular, which leaves the likely outcome of it (Brexit negotiating period) being extended,” CMC Markets analyst David Madden said.
Challenger banks OneSavings and Charter Court Financial Services both surged about 11 percent, topping the mid-cap index, after confirming merger talks which analysts at Investec described as “a marriage made in heaven”.
The rise marked OneSavings’ biggest one-day gain since August 2016 and Charter Court Financial enjoyed its best-ever day.
“NO-DEAL” BREXIT? NO FEAR
An index of financial stocks recorded their best day in a week, rebounding after two sessions of heavy losses and after China’s central bank chief pledged more policy support to further support a slowing economy.
“Financials are not afraid of a no-deal Brexit. That’s helping the banks,” Madden said.
Sentiment was also helped by a source-based report that Deutsche Bank’s board had agreed to hold talks with rival Commerzbank on the feasibility of a merger.
“M&A activity will of course help the (financial) sector but I think it has got more to do with lack of fear surrounding Brexit,” Madden added.
Even more support came from mining companies , which rose as falling inventories and China’s stimulus pledge helped metal prices climb, and oil majors that rose after Saudi Arabia stood by OPEC-led supply cuts.
London-listed shares of Ryanair were down 2.1 percent. The low-cost carrier said its board had passed resolutions to protect its EU airline licences after Brexit. But traders cited concerns about possible disruptions from Brexit even despite the contingency plans.
Shipping services provider Clarkson slumped 12.5 percent on its worst day in a year given lower earnings and a cautious outlook for financial segment.
Cairn Energy tumbled 11 percent to its biggest one-day decline in four years after saying it expected a delay in the timetable for an award in relation to its proceedings against India.
Builder Kier Group dropped 12 percent on the small cap index after forecasting higher debt for 2018.
British challenger banks largely underperform wider index - tmsnrt.rs/2NVlRHA
Reporting by Muvija M and Shashwat Awasthi in Bengaluru; editing by Mark Heinrich