(MENAFN- AFP) London's stock market rallied and the pound surged on Friday as Prime Minister David Cameron's "business-friendly" Conservatives scored a surprise victory in Britain's general election.
Most other European indices shot up as well as US job creation figures, while solid, were viewed by the market as not being strong enough for the US Federal Reserve to begin raising interest rates next year.
The benchmark FTSE 100 index jumped 2.02 percent to stand at 7,025.85 points in afternoon deals, lifted by soaring share price gains for banks and energy majors.
Among the biggest winners were energy firm Centrica, up 7.54 percent to 276.80 pence and state-rescued Lloyds Banking Group, up 6.62 percent to 87.57 pence, with the Conservatives seen as being less tough on regulating the financial and energy sectors compared with the Labour party, which will remain as the main opposition party.
"The Conservatives are seen as being more business friendly and more importantly, offer continuity in a country that last year experienced the fastest rate of growth in the G7," Craig Erlam, senior market analyst at Oanda trading group, said Friday.
As the results rolled in, forecasts of a close contest between the Conservatives and Labour turned out to be wide of the mark, with Cameron winning a majority in parliament and securing five more years in Downing Street.
The outcome sent the British pound soaring to $1.5420 from $1.5262 late in New York on Thursday. The euro was down at 72.98 pence from 73.82 pence.
The European single currency had slipped to under $1.11 from $1.1266 on Thursday, but shot up to $1.1274 after the US jobs numbers pushed back expectations for a rate hike that had been boosting the greenback.
"A night of victory for the Conservative party has put UK markets on the front foot, with sterling and the FTSE moving higher," said Chris Beauchamp, senior market analyst at IG trading group.
"For investors, the results... mean that they can cease worrying about the UK economy, and focus on the other areas of concern, like Greece and whether the Fed will hike rates this year."
"The result removes the risk that the economy suffers a prolonged period of political uncertainty," said Vicky Redwood, chief UK economist at Capital Economics research group.
- Scotland, EU risks -
As well as the Conservatives, the other big winners were the pro-independence Scottish National Party (SNP), which won 56 of the 59 seats in Scotland.
The success of the SNP could increase pressure for a fresh referendum on Scottish independence, even though that was rejected just last September.
An overall victory for the Conservatives will meanwhile trigger a referendum on Britain's membership in the EU by 2017.
And Britain can expect more austerity as Cameron looks to further slash the country's huge deficit.
"Admittedly, a Tory victory means that the economy will have to endure a fairly aggressive renewal of the fiscal squeeze," said Redwood.
"On top of that, investment could suffer from uncertainty ahead of the referendum on UK membership of the EU that will presumably now take place. Meanwhile, the success of the SNP suggests that Scottish independence could also come back onto the agenda."
- US focus -
European market focus Friday was also firmly on the United States, with the world's biggest economy publishing key monthly jobs data.
European indices shot up after the Labor Department reported the US economy created a solid 223,000 net new jobs in April.
"The figures weren't exceptional and the market thus estimated there is no chance the Fed will raise rates in June, and more likely do so at the end of the year," said Saxo Banque analyst Andrea Tueni.
In afternoon deals, Frankfurt's DAX 30 stocks index climbed 1.34 percent to 11,560.90 points and the CAC 40 in Paris soared 2.05 percent to 5,068.85 compared with Thursday's closing levels.
Madrid climbed 1.09 and Milan rose 1.39 percent.
The US Federal Reserve had been expected to start increasing the benchmark federal funds rate from the zero level in June, but the US economy unexpectedly slowed in the first quarter of the year.
The jobs figures also sent US stocks higher at the opening bell.
The Dow Jones Industrial Average jumped 1.19 percent to 18,136.53 points in the first five minutes of trading.
The broad-based S&P 500 gained 1.01 percent to 2,109.15, while the tech-rich Nasdaq Composite Index rose 1.05 percent to 4,997.45.
The market's positive reaction reflected that the report "isn't the type of news that the data-dependent Fed can take to the rate-hike bank," said Briefing.com analyst Patrick O'Hare.
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