UK stocks jumped in early trading on Tuesday as investors showed optimism that US politicians can avert a default by agreeing to raise the debt ceiling.
The FTSE 100 in London was trading up 0.6% at around 6,550 this morning; the last time it has closed higher was on September 26th when it finished at 6,565.59.
There are now just two days to go before the government hits its $16.7tn borrowing limit and is unable to pay its bills, something which could cause "massive disruption" to the world economy and risk tipping it into another recession, according to International Monetary Fund Managing Director Christine Lagarde.
Senate Majority Leader Harry Reid and Minority leader Mitch McConnell made positive comments following their lengthy discussions on Monday, saying that a deal is within reach ahead of the October 17th deadline.
"I'm very optimistic that we that we will reach an agreement that's reasonable in nature this week," Reid said.
According to market reports, the proposal under discussion includes reopening the government to January and suspending the debt limit through to February 2014.
While the debt-ceiling debate will continue to drive market sentiment over the next few days, investors will be keeping a close eye on corporate results from the US, as third-quarterearnings season gets into full swing.
Citigroup, Coca-Cola and Intel will release their quarterly earnings on Tuesday, IBM will report on Wednesday, while results from Verizon Communication, Google and General Electric are expected on Thursday.
FTSE 100: Burberry sinks after boardroom shake-up
High-end luxury brand Burberry was one of the few blue chips in the red this morning, falling sharply after the surprise exit of Chief Executive Officer (CEO) Angela Ahrendts and appointment of Chief Creative Officer Christopher Bailey. Ahrendts, who earlier this year became the first woman to top the list of the highest paid CEO on the FTSE 100, will leave the company in mid-2014 and move to Apple to take up a newly created position.
The news came as the company reported 14% growth in underlying sales in the first half, helped by strong demand from Chinese customers, and raised its profit guidance for the period.
Leading the upside were the miners as risk appetite returned to the market on hopes over a fiscal deal in the US. Rio Tinto led the risers after enjoying a good third quarter of production, having produced and shipped a record level of iron ore thanks to its new infrastructure in Western Australia.
Sector peers Antofagasta, Anglo American, Vedanta Resources, Fresnillo, Randgold and BHP Billiton were also making decent gains this morning.
Hargreaves Lansdown rose after achieving record assets under administration (AuA) in the first quarter of fiscal year 2014. The financial services company reported AuA of £39.3bn in the three months to September 30th, up 7.9% from the previous quarter's £36.4bn.
Severn Trent was subdued after analysts at Societe Generale downgraded their ratings for the utility group to 'sell'.
FTSE 250: Ashtead rises after JPMorgan upgrade
Industrial equipment rental firm Ashtead jumped this morning after JPMorgan Cazenove raised its rating for the stock to 'overweight'.
Steel and mining group EVRAZ gained after selling its Gramoteinskaya thermal coal mine in Russia as it continues to offload non-performing assets.
Builder Bellway also rose after lifting its final dividend 50%, buoyed by exceptional prospects for the UK housing market and a bulging order book.
FTSE 100 - Risers
Rio Tinto (RIO) 3,179.00p +3.08%
WPP (WPP) 1,269.00p +2.17%
Royal Bank of Scotland Group (RBS) 379.50p +2.10%
Antofagasta (ANTO) 885.00p +2.08%
Fresnillo (FRES) 956.00p +2.03%
Mondi (MNDI) 1,087.00p +1.97%
BHP Billiton (BLT) 1,847.00p +1.68%
Old Mutual (OML) 194.20p +1.68%
Anglo American (AAL) 1,546.50p +1.51%
Vedanta Resources (VED) 1,044.00p +1.46%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,524.00p -3.85%
Severn Trent (SVT) 1,786.00p -1.22%
Johnson Matthey (JMAT) 2,970.00p -0.57%
Croda International (CRDA) 2,501.00p -0.36%
Resolution Ltd. (RSL) 334.80p -0.36%
Standard Chartered (STAN) 1,465.00p -0.31%
Schroders (SDR) 2,645.00p -0.19%
RSA Insurance Group (RSA) 119.10p -0.17%
Admiral Group (ADM) 1,227.00p -0.16%
SSE (SSE) 1,440.00p -0.14%
FTSE 250 - Risers
Ashtead Group (AHT) 652.00p +3.66%
Man Group (EMG) 81.40p +3.43%
Lonmin (LMI) 326.60p +3.16%
Bellway (BWY) 1,425.00p +2.81%
Evraz (EVR) 133.00p +2.54%
Ferrexpo (FXPO) 189.30p +2.32%
Kazakhmys (KAZ) 261.00p +2.27%
Barratt Developments (BDEV) 343.70p +2.08%
Thomas Cook Group (TCG) 153.30p +2.00%
Enterprise Inns (ETI) 156.70p +1.95%
FTSE 250 - Fallers
Essar Energy (ESSR) 122.40p -2.31%
Afren (AFR) 142.90p -1.85%
Oxford Instruments (OXIG) 1,377.00p -1.78%
Perform Group (PER) 540.50p -1.73%
Kier Group (KIE) 1,732.00p -1.59%
Menzies(John) (MNZS) 815.50p -1.45%
St. Modwen Properties (SMP) 326.00p -1.39%
Spirent Communications (SPT) 127.80p -1.31%
Computacenter (CCC) 547.00p -1.17%
KCOM Group (KCOM) 92.80p -1.12%