FTSE led higher by banks after Greek debt deal done

LONDON (Reuters) - The FTSE 100 hit a two-week high on Monday, with banks among the best performers, after euro zone leaders agreed on a road map to a third bailout for near-bankrupt Greece.

A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth

The FTSE 100 index .FTSE closed 1 percent up at 6,737.95 points, with advances in banks - highly geared to market declines - adding the most points to the index.

“I was ‘long’ on the market last week, betting that a Greek deal would be reached, and the agreement on Greece has had a natural, positive kick-on effect for the banks,” Central Markets trading analyst Joe Neighbour said.

Shawbrook SHAW.L and HSBC HSBA.L rose the most among banks, gaining 4.6 and 2.1 percent respectively.

News of a deal with creditors was met with a measure of relief mixed with much anger in Greece, after it became clear the country will have to swallow more austerity in what some see as Berlin’s attempts to humiliate Athens as a punishment for its resistance to another round of cuts.

“It’s generally seen by the markets at the moment as a done deal, but clearly there will be some sort of political wranglings about this both domestically for [Greek Prime Minister Alexis] Tsipras and his party and within the euro zone region as well,” said London Capital Group analyst Brenda Kelly.

British Airways' owner International Consolidated Airlines Group (IAG) ICAG.L was the biggest gainer of the day in percentage terms, rising 3.4 percent after UBS upgraded the stock to "buy" from "neutral".

Supermarkets Morrison MRW.L, Tesco TSCO.L, Marks and Spencer MKS.L and Sainsbury SBRY.L also rose, adding between 3 and 1.7 percent.

“It is very much a relief rally, with a huge bend towards the defensive, and that is a lot of the reason why supermarkets are benefiting today,” Kelly said.

Among mid caps, speciality chemical maker Alent ALNT.L soared 44.2 percent to a record high after a bid from U.S. peer Platform Specialty PAH.N, pushing the FTSE 350 Chemicals Index .FTNMX1350 3.2 percent higher.

On the downside, International Personal Finance IPF.L plummeted 25.2 percent on proposed revisions to a credit amendment law in Poland, one of its biggest markets.

The FTSE 100 is up by 2.6 percent since the start of 2015, although the index is down over 5 percent from a record high of 7,122.74 points reached in April.

Additional reporting by Sudip Kar-Gupta; Editing by Larry King