The FTSE 100 index enjoyed a solid session on Tuesday, rising steadily to close 61 points or 1.0% higher at 6,338. The FTSE 250 index, meanwhile, added 102 points or 0.8% to settle at 13,476.
European markets took their lead from Asia, where the Nikkei 225 gained nearly 2% Tuesday following comments from Japanese officials regarding policy measures to stimulate growth. Markets in China remained closed for a holiday.
With the G-20 summit scheduled for later this week, G-7 finance ministers said they will maintain their stance on market-determined exchange rates and will not pressure Japanese policymakers from intentionally weakening the yen to help stimulate the country's economy.
Across the pond, much focus will be on President Obama's State of the Union address Tuesday night.
In London, a rare sight was witnessed on the FTSE 100 leaderboard, where the top three performers were UK banks. Barclays (BARC), Lloyds Banking Group (LLOY) and Royal Bank of Scotland (RBS) took on 8.6%, 5.1% and 4.1% respectively by close of business.
The trigger for this financials rally was Barclays’ full-year results announcement, which revealed a strong final quarter for the investment bank division, while the group as a whole swung to a net loss for the year as a whole.
The firm posted a net loss for 2012 of £1.04 billion, after a £3 billion net profit in 2011, mainly because of a non-cash charge from the rising value of its own debt. Revenue, net of insurance claims, rose slightly to £29.04 billion, from £28.5 billion the year before.
The bank outlined a strategy that will see Barclays refocus investment in Africa, the US and the UK. The bank will cut at least 3,700 jobs, mostly in its investment bank, as it looks to slice £1.7 billion from its cost base down to around £16.8 billion by 2015.
The investment bank—which includes both Barclays' trading and advisory businesses—posted a strong performance through the final three months of 2012, with fourth-quarter revenue, at £2.6 billion, up 43% year-on-year, though down 2% quarter-on-quarter.
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