London - Britain's top share index rose to its highest level so far in October on Tuesday, buoyed by signs of a deal to fix the US budget and debt ceiling stalemate that has weighed on stock markets this month.
The blue-chip FTSE 100 index rose by 0.8 percent, or 51.06 points, to 6,558.71 points by 12:13 SA time to mark its highest level since September 27, before the political deadlock that shut down some US government functions.
“We've seen some movement overnight over the debt ceiling, and we're starting to see people wanting to get involved again in the FTSE 100,” said Will Hedden, sales trader at IG.
US Senate Majority Leader Harry Reid, a Democrat, said Senate leaders had made “tremendous progress” on working towards a deal to avoid default after a day of talks with his Republican counterpart Mitch McConnell on Monday.
Concerns that the United States will hit the $16.7 trillion US debt ceiling on October 17 have weighed on markets since the beginning of the month, when political deadlock began a partial shutdown of the federal government.
Although the FTSE 100 remains below a 13-year high of 6,875.62 points reached in late May, the index is still up 11 percent since the start of 2013.
Stocks sensitive to optimism over the global economy were the biggest gainers, with financials and basic material stocks combining to add more than 21 points to the index.
Miner Rio Tinto climbed the most on the FTSE and added the most to the FTSE 100 with a 3.6 percent gain after posting record coal and iron ore output in the third quarter and boosting its forecast copper output for 2013.
But Burberry missed out on the FTSE 100's rally, slumping 4.5 percent to make it the worst-performing FTSE stock after the group lost its chief executive to technology and mobile phone group Apple.
Traders said the loss of chief executive Angela Ahrendts marked another negative drag on the stock, which had already lost ground last week after warning of a slowdown in its important Chinese market.
“This is the biggest of a number of recent high profile departures, and the decision to place Christopher Bailey in sole custody of both chief executive and Chief creative officer has led to concerns over the burden placed on one pair of shoulders,” Toby Morris, senior sales trader at CMC Markets, said in a trading note. - Reuters