FTSE rises after Diamond's exit

Another tumultuous day for Barclays saw its shares slip into the red following the resignation of its boss Bob Diamond.

The beleaguered bank's shares were down nearly 1%, or 1.4p at 167.1p, after surrendering earlier gains as the chief executive was followed out of the door by chief operating officer Jerry del Missier.

But the wider FTSE 100 Index was up 47.1 points at 5687.7, or 0.8%, to fresh two month highs, despite a mixed day for banks amid caution about how the rate rigging scandal will impact the rest of the sector.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "It remains to be seen whether Barclays will eventually end up with some credit in being the first to hold its hand up over the Libor investigations." But he added that the spectre of further regulation, exposure to Europe and slowing global economic growth continue to overshadow the sector.

Royal Bank of Scotland was down 2.5p at 216.5p, HSBC was up 0.2p at 570.3p and Lloyds was up 0.3p at 31.8p.

Markets were boosted by hopes that the central banks will announce more stimulus amid growing signs the global economy is slowing. A closely watched Markit/CIPS survey showed the construction sector contracted at its fastest rate for two and a half years in June.

The gloomy findings raised expectations that the Bank of England will order an increase in its quantitative easing programme this week, in a move that would boost share prices. And the European Central Bank is expected to cut interest rates amid the run of worrying economic data in recent weeks.

Meanwhile, traders believe there is further scope for stimulus measures in Japan and China.

The Dax in Germany and the Cac-40 in France were both up around 1%, while the Dow Jones Industrial Average was ahead 0.4% as the London market closed amid encouraging factory orders data.

The pound was down against the euro at 1.24 as speculation that the Bank of England will print more money weakened sterling. But the pound was up against the dollar at 1.57 as the greenback weakened against most currencies.