Afternoon Markets: FTSE closes higher as political situation stabilises

The main UK index recovered from a mixed morning as investors assessed the new coalition Government, closing up 46.24 points or 0.92% to 5,383.45.

Financials fell on the news the incoming Lib Dem-Tory administration will instigate sweeping reforms of the banking sector. Mooted plans include a major loan guarantee scheme and the use of net lending targets for nationalised banks Royal Bank of Scotland (RBS) and Lloyds. Both banks emerged as the biggest losers today. Shares in RBS took the brunt of the hit, dropping 1.6p to 48.4 pence per share, down 3.2%. Taxpayers bailed out the failed bank in 2008, and now own an 84% majority share in the institution. Shares in Lloyds, 43% taxpayer-owned, also slid following this aftern...