FTSE buoyed by US debt deal

The FTSE 100 tracked global markets upwards as investors were buoyed by the breaking of the deadlock over US debt.

As President Obama announced that the Democrats and Republicans had finally reached an agreement over raising the country's debt ceiling Asian markets responded positively.

Investors piled back into riskier stocks and abandoned gold as the threat of a default by the US and a loss of its Triple A rating waned.

On opening this morning London's blue chip index was on the front foot with banks and miners helping to fuel significant gains.

But safety testing firm Intertek was the top climber, jumping by five per cent after it reported 18 per cent revenue growth in the first half.

In the mining sector Vedanta was up 3.3 per cent and Rio Tinto 2.2 per cent.

Meanwhile Tullow Oil was up 2.2 per cent and engineer GKN by a similar level. In the media sector ITV saw a healthy two per cent lift.

Banks were lifted by the US debt deal with RBS up 1.6 per cent and Barclays 1.1 per cent. Lloyds edged up by 0.5 per cent.

HSBC was up 1.5 per cent after it unveiled worldwide cost-cutting plans and posted pre-tax profits of £6.7bn for the half year.

There were few significant fallers on the index with Randgold Resources and BAE Systems dropping marginally.

Despite the healthy start to the session investors were still on guard as doubts remained as to whether the deal in the US – to be voted on by Congress later – would satisfy ratings agency Standard and Poor's.

The deal would cut the budget deficit by $1 trillion (£608bn) over 10 years, with additional savings of $1.4 trillion possible.

Overnight Japan's Nikkei share average rose 1.3 per cent inching back towards a four-month high hit in early July. Banking stocks led gains after first-quarter earnings results showed banks making better-than-expected progress towards their full-year estimates.

Meanwhile in economic data the UK Purchasing Managers' Index (PMI) for manufacturing showed that the reading had slipped to 49.1 in July from 51.3 the previous month. In the Eurozone the PMI was weak except in Italy.

Across the Atlantic later June construction data is due for release.