FTSE 100 surges to new record high, breaking through 7,200 for first time ever

Index has started 2017 on the rise as mining and financial firms see strong growth

The UK’s blue-chip index has been boosted by the falling pound as many companies earn significant proportions of their income in other currencies (PA)

Britain’s index of leading shares surged to another record high on Tuesday as financial and commodity-related companies saw solid growth.

The FTSE 100 followed European markets which started the new year strongly on Monday while British traders enjoyed a day off.

Shares rose 0.9 per cent to hit a fresh record high of 7,205.21 points, the first time it has broken through the 7,200 mark. It later fell back slightly to end the day at 7,177.89.

Mining stocks continued to gain ground amid hopes of strong US growth and an infrastructure spending boom when Donald Trump assumes the presidency later this month.

Not all big companies fared well, however – Next shares were under pressure after Deutsche Bank downgraded its rating on the stock to “hold” from “buy”.

The sharp decline in the value of the pound against the US dollar since the UK voted to leave the EU has helped the FTSE gain ground as many companies on the index make a significant proportion of their profits in other currencies.

While the index has reached a new record in sterling terms, when measured in dollars it is still around 4 per cent down over the last twelve months.

Many economists have made gloomy predictions for the year ahead as prices rise and the UK begins to manage its withdrawal from the EU.

On the continent, the pan-European STOXX 600 index continued its rise, up 0.7 per cent in early trading to hit its highest level since December 2015.

Among individual stock movers, Italian banks were once again among top risers, with newly-merged Banco BPM gaining 4.6 per cent on its second day of trading, building on a strong rise in the previous session.

Fellow banking stocks Credit Suisse and Bank of Ireland were also among top STOXX gainers, with the European banking index SX7P rising 1 per cent.

Additional reporting by Reuters