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FTSE 100 extends gains as RBS, Barclays and Lloyds rise more than 10pct

The FTSE 100 extended gains to over 150 points this afternoon as banks RBS and Barclays rallied 15 percent on the back of today's anti-crisis plan unveiled by the EU following prolonged negotiations.
FTSE 100 extends gains as RBS, Barclays and Lloyds rise more than 10pct

Banks managed to gain more ground this afternoon as demand for riskier stocks showed no sign of relenting after EU policymakers reached an agreement on an anti-crisis plan, which has removed a layer of risks from the financial sector.

The troika of Royal Bank of Scotland (LON:RBS, up 15.7pct at 28.67p), Barclays (LON:BARC, up 15.1pct at 205.65p) and Lloyds (LON:LLOY, up 10pct at 37.62p) took their gains above 10 percent by midday, driving the blue chip FTSE 100 index to 5,717, extending its daily gains to 165 points (3 percent).

Early this morning, the EU announced an agreement to boost the bailout fund to €1 trillion, write down 50 percent of Greek debts owned by private bondholders and require EU banks to raise additional capital totalling €106 billion.

UK banks as expected were not included in the recapitalisation plan, which means they will not need to raise additional funds.

“Within the UK, all the nonsense which has been written suggesting that BARC, RBS and others may need to raise fresh capital can be safely ignored,” said analyst at Evolution Securities Ian Gordon.

The analyst also noted that Barclays and RBS have been the top performers since the report from the Independent Commission on Banking (ICB) came out in September. Gordon said that both stocks should rally much further as the current price to net tangible assets ratio of 0.5 is “the wrong price”.

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