FTSE soars to 11 month high as interest rate cut looms

The FTSE 100 Index was up 31.9 points to 6623.3 after Glencore soared more than 4%, or 8.3p to 175.6p, as commodity stocks continued to be boosted by the weak pound.

Anglo American was also riding high, up 35.7p to 780.7p, as the slump in sterling strengthened the position of firms who sell their products in dollars.

But while speculation that the Bank of England will slash interest rates from 0.5% helped lift the London market, the possibility of a cut to the cost of borrowing heaped further pressure on the pound.

Sterling was down 0.45% against the dollar at 1.289 US dollars, while the pound was also 0.3% lower against the euro at 1.168.

Bank governor Mark Carney has already signalled that policymakers on the Monetary Policy Committee (MPC) would vote to slash rates over the summer, suggesting a cut in July or August.

Economists at Hargreaves Lansdown said it was “now probable” that rates will be cut at the MPC meeting this Thursday, with financial markets pricing in a reduction from 0.5% to 0.25%.

They said it was possible that rates may also be lowered to zero in August as the Bank struggles to bolster flagging growth and contain the fallout of Britain’s vote to leave the EU.

Across Europe, Germany’s Dax was making strong headway - up 1.2% - while the Cac 40 in France climbed 0.9%.

The price of oil was down 1.7% at 45.96 US dollars a barrel, as the market reacted to signs that US shale drillers are coping with lower prices.

The slide in Brent Crude hit oil majors, with Royal Dutch Shell B down 15p to 2111.5p and rival BP falling 1.9p to 455.1p.

In stocks, housebuilders continued on from Friday’s rally when UBS analyst Gregor Kuglitsch said the sector was in better shape now than during the 2008 financial crash and current share prices provided an attractive entry point for investors.

Barratt Developments was up 12p at 385.2p, Charles Church-builder Persimmon rose 43p to 1463p and Taylor Wimpey climbed 3.5p to 135p.

Property stocks have endured a punishing run since Britain voted to leave the European Union, with investors taking flight amid fears that the industry could be forced to endure falling house prices.

Meanwhile, electricals retailer Dixons Carphone was among the biggest fallers after it suffered a broker downgrade by Barclays from overweight to equalweight.

Shares were down 0.8p to 314.2p.