The FTSE 100 advanced 0.6 percent, outperforming European peers, and the FTSE 250 was 0.1 percent higher by 1151 GMT. But Ireland’s main index, seen as a gauge of Brexit jitters, lagged behind with a 0.1 percent dip.
Sterling began the week in the red, as Prime Minister Theresa May still lacked a ratified divorce agreement and talks with the European Union on amendments to the deal stalled, less than three weeks before Britain’s slated March 29 departure.
May’s spokesman reaffirmed that a so-called meaningful vote on her Brexit deal would take place as planned on Tuesday, following media reports that she might put it off.
“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.
The pound’s pain helped blue-chip components that get a large part of their revenue in dollars. AstraZeneca, GlaxoSmithKline and Diageo were among the top boosts.
Challenger banks OneSavings and Charter Court Financial Services surged more than 9 percent, topping the mid-cap index, after confirming merger talks which analysts at Investec described as “a marriage made in heaven”.
The rise placed OneSavings on course for its biggest one-day gain since August 2016 and Charter Court Financial was on track for its best-ever day.
“NO-DEAL” BREXIT? NO FEAR
An index of financial stocks was on track for its best day in almost a month, 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 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 miners, 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 slid nearly 6.2 percent given lower earnings and a cautious outlook for financial segment.
Cairn Energy dropped 6.8 percent after saying it expected a delay in the timetable for an award in relation to its proceedings against India.
Builder Kier Group slumped 13.3 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