Finance
British equities recover from Friday's selloff as banks rally
Published by Global Banking & Finance Review®
Posted on August 4, 2025
2 min readLast updated: January 22, 2026
Quick Summary
British equities rebounded as bank shares surged, driven by interest rate cut prospects and a Supreme Court ruling. FTSE 100 and FTSE 250 indices gained.
British Stocks Bounce Back as Bank Shares Surge Following Selloff
Market Recovery and Bank Performance
(Reuters) -Bank shares led British equities higher on Monday, rebounding from a sharp selloff on Friday, while investors looked ahead to the prospect of interest rate cuts by the Bank of England later this week.
Impact of Supreme Court Ruling
The blue-chip FTSE 100 rose 0.5% as of 0925 GMT, after logging its biggest percentage drop in almost four months on Friday.
Sector Performances
The domestically focused midcap FTSE 250 gained 0.6%.
Interest Rate Expectations
Shares in British banks surged 2.1% on Monday after the UK's Supreme Court overturned a ruling on motor finance commissions, easing fears of a redress scheme that some analysts had warned could cost tens of billions of pounds.
Lloyds Banking Group shares jumped 7.4%, on track for its biggest daily gain in over nine years.
Close Brothers surged nearly 20%, while Barclays rose 2.3%.
Aerospace and defence gained 2.2%.
Rolls-Royce and BAE Systems were among the top gainers in the FTSE 100, up 2.7% and 1.8%, respectively.
BP rose 1.3% after the energy heavyweight said it has made its largest oil and gas discovery in 25 years in Brazil's Santos basin.
Conversely, Convatec Group fell nearly 2% after the British medical equipment maker said CEO Karim Bitar would take a medical leave of absence.
Auction Technology Group's plunged 19.6% and was the top loser on the FTSE 250, after the online auction operator cut its annual profit margin forecast.
On the radar this week, the Bank of England is widely expected to cut its key interest rate to 4% from 4.25% on Thursday and to lower it once more before the end of the year, despite consumer price inflation rising to close to double the central bank's 2% target in June.
Meanwhile, a sharp downward revision to past U.S. jobs data on Friday, followed by President Donald Trump's decision to fire the head of Labor Statistics added an extra layer of nervousness among investors over the credibility of U.S. economic data.
(Reporting by Sanchayaita Roy in Bengaluru; Editing by Vijay Kishore)
Key Takeaways
- •British equities rebounded after Friday's selloff.
- •Bank shares surged following a Supreme Court ruling.
- •FTSE 100 and FTSE 250 indices showed positive gains.
- •Interest rate cuts by the Bank of England are anticipated.
- •Lloyds Banking Group and Close Brothers saw significant gains.
Frequently Asked Questions about British equities recover from Friday's selloff as banks rally
1What is the FTSE 100?
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, measured by market capitalization.
2What are interest rates?
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount over a specified period.
3What is a bank's Supreme Court ruling?
A Supreme Court ruling is a legal decision made by the highest court in the UK, which can significantly impact financial regulations and banking practices.
4What is the Bank of England?
The Bank of England is the central bank of the UK, responsible for issuing currency, managing monetary policy, and ensuring financial stability.
5What is equity investment?
Equity investment involves purchasing shares in a company, giving the investor ownership rights and a claim on a portion of the company's profits.
