British Stocks Surge on Conservative's Strong Election Result

Reuters

Britain's stock market surged higher on Friday after Prime Minister David Cameron's Conservatives unexpectedly won the general election, giving the party another five years in power.

The blue-chip FTSE 100 index rose 1.9 percent to 7,017.35 points by 1104 GMT, within touching distance of the record high of 7,122.74 points reached last month. It headed for its biggest one-day percentage gain since early January.

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The FTSE 250 mid-cap index rose 2.9 percent to set an all-time high as the election results came through, pushing the Conservatives towards an overall majority and overturning poll predictions of a hung parliament.

Many investors had backed the Conservatives over the opposition, center-left Labor Party which had set out tough new regulations on industries such as banking, utilities, real estate and gambling which could have hit the profits of companies in those sectors.

"We are seeing a relief rally in some domestically focussed names, with utilities, real estate, transport and banks having a pretty good day," Robert Parkes, director of equity strategy at HSBC Bank said.

"But the political uncertainty isn't going to go away. We have now got a referendum of Britain's EU membership on the horizon."

The FTSE 100 Volatility Index fell 17.5 percent to 13.69, the lowest since July. Trading volumes on the FTSE 100 were 93 percent of its 90-day daily average by midday, against 55 percent for the pan-European FTSEurofirst 300 index.