By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- A relief rally was set to sweep through
London's benchmark index on Friday as projections show Scottish
voters have opted to stay in the U.K., with sentiment expected to
push European stocks higher as well.
Futures for the FTSE 100 index jumped 1% ahead of the open, with
expectations that European markets will also rise at the open. For
the week, the London index has logged a gain of barely 0.2%,
sharply underperforming a 1% rise for the Stoxx Europe 600 index
.
The FTSE 100 rose 0.6% on Thursday, bucking three straight
sessions of losses. While the official tally is yet to be
announced, projections from the BBC and Reuters showed victory for
Scottish residents voting to remain a part of the U.K.
The British pound has gained, as was expected, on relief over
the expected "No" vote. Sterling (GBPUSD) last changed hands
against the dollar $1.6443, versus $1.6400 late Thursday. The move
is more dramatic when compared with a $1.6260 level late Wednesday.
U.K. government bonds were also expected to rally Friday.
Scottish stocks set to surge: Brenda Kelly, chief strategist at
IG, said in a note that banks such as Royal Bank of Scotland PLC
(RBS) and Lloyds Banking Group PLC (LYG) could stand out in any
relief rally.
Investec analysts said in a note that RBS shares have already
seen a rally of 4.4% in anticipation of a "No" vote, and while a
rally is expected Friday, they see little further upside for
RBS.
Kelly said big Scottish firms like Standard Life PLC , Aberdeen
Asset Management PLC and Weir Group PLC are also on the watch
list.
"Investors in these firms will be relieved that management will
be able to devote their time to business performance, rather than
fretting about contract changes or headquarters moves," said Kelly
in a note.
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