FTSE climbs on Eurozone hopes, but G4S loses 18% after £5bn deal to buy rival ISS

Overall the FTSE 100 has jumped 73.41 points to 5539.77, following the weekend’s G20 meeting which gave renewed hope that Europe’s banks could be protected from the current Eurozone problems. Jonathan Bristow at Valbury Capital said:

G20 leaders have given a European summit on 23 October as a deadline for the European debt crisis to have an escape plan all worked out otherwise the problem will be a global issue, personally I thought it was already, but setting a date makes it feel nice and official. Early indications of the plan have already gained approval as we try to stop Greek default, bolster banks to avoid further bailouts and stop the problem spreading further. I would like to remind everyone that its taken us two years to get to the point where we feel we need an ‘A-Team’ style plan, so giving us a deadline of only a week can really just serve for those in charge to look like the hero’s for having done all the work so quickly.

So banks are among the main risers, with Royal Bank of Scotland 1p better at 25.26p and Barclays up 6.4p at 182.45p.

Aviva has added 15.8p to 354.8p as UBS raised its rating on the insurer from neutral to buy and its price target from 290p to 380p. UBS said:

Aviva is the most Euro-exposed of the UK insurers, and this duly drove underperformance over the summer as politicians failed to take a grip of the sovereign crisis. If, as seems increasingly likely, policymakers take steps in the fourth quarter to restore order, then Aviva’s underperformance should reverse. So far though, the stock’s bounce has lagged those of European peers such as Axa and Allianz.

Insurers are increasingly unlikely to be recapitalised. A recapitalisation of the banking system followed by an orderly default in Greece looks like a benign outcome for insurers, particularly relative to the banks.