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UK banking stocks up after Unicredit restructuring plan unveiled

Government over-paid farmers for both 2015 and 2016 subsidy schemes
Government over-paid farmers for both 2015 and 2016 subsidy schemes

British banking stocks took the FTSE 100 higher on the back of news that Italian lender Unicredit will launch a major restructuring programme that would help remove billions of euros of bad debt from its balance sheet.

The UK’s blue chip index closed higher by 1.1% or 78.15 points at 6,968.57 points, supported by lenders including Royal Bank of Scotland which rose 5.6p to 219.5p, Standar Chartered, which jumped 15.2p to 668.2p and HSBC which rose 8.3p to 660.1p.

It follows news that Italian banking giant Unicredit will axe 14,000 jobs by 2019 and make a £10.9billion cash-call to investors under a shake-up that will help remove nearly £15billion of bad debts from the books of the country’s biggest bank.

It comes amid fears over Italy’s banking sector following he country’s No vote on constitutional reforms which force Prime Minister Matteo Renzi to resign and has led to worries that indebted lenders will struggle to find refinancing.

Across Europe, Italy’s FTSE MIB closed higher by 2.5%, the French Cac 40 rose 0.9% and the German Dax rose 0.8%.

In currency markets sterling was relatively flat against the dollar, giving up earlier gains to trade at 1.267.  The pound was up 0.1% against the euro at 1.193.

The UK currency rose as high as 1.272 as the US dollar slumped on jitters over Wednesday’s Federal Reserve interest rate decision.

It also made gains following UK Consumer Price Index inflation data for November, which hit its highest level in two-and-a-half years at 1.2%.

Michael Hewson, chief market analyst at CMS Markets UK, said:  “This slow rise in inflation expectations is certainly helping feed the narrative that the Bank of England will struggle to ease policy further and raised the prospect that the next move in rates could well be up, and not down.”

In oil markets, Brent crude rose 0.5% to 55.68 US dollars per barrel (£43.90). Gains were relatively muted as investors cashed in on major price increases a day earlier, which were fuelled by news that non-Opec producers would curb output to buoy prices