Easing banking fears help UK stocks rise, Fed meeting in focus

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London stocks rose more than 1% on Tuesday, led by gains in lenders after fears of a banking crisis appeared to ease, while the focus shifted to the U.S. Federal Reserve ahead of its rate-setting meeting.

"Investors at this point in time feel comforted with how this mini banking crisis is being handled," said Craig Erlam, senior market analyst at Oanda.BarclaysWeakness in the pound also aided the exporter-heavy FTSE 100.

Investor focus would now shift towards the U.S. Federal Reserve's upcoming interest rate decision as the two-day monetary policy meeting begins later today. Recent turmoil in the banking sector sparked by the collapse of two regional U.S. banks coupled with troubles at European lender Credit Suisse prompted investors to sharply re-adjust their expectations around interest rate hikes.

The FTSE 100 has erased most of its early yearly gains, with the index now up only 0.5% on the year, due to the recent volatility. Investors would be looking out for February UK inflation data due Wednesday, the final pit stop to gauge the state of the economy before the Bank of England's decision on monetary policy tightening due Thursday.

 

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