Markets: Banks are driving Santa's rally sleigh BANKING shares helped fuel a growing "santa rally" in London yesterday as broker Credit Suisse upgraded its view of the sector in Europe and despite more damaging news about the industry. Swiss bank UBS agreed penalties of £940 million to settle with global regulators after admitting to fraud and corrupt payments as it sought to manipulate Libor rates to flatter its own financial strength and reputation. Despite that, the banking sector led the market higher with Barclays, Lloyds and Royal Bank of Scotland among the gainers. Matt Basi, senior sales trader at CMC Markets, said: "Investors seem to be taking comfort from the fact that the new UBS management is largely untainted by the scandal, and has already announced massive job cuts and potentially cleared out all the legacy problems." RBS is thought to be within weeks of announcing its own settlement, but its shares were unaffected by the size of the penalty, which was in line with previous City speculation. It lifted 10.3p to 315.4p, while Barclays improved 5.4p to 266.5p and Lloyds added 2p at 49.2p. As hopes that US politicians will reach a deal to avoid their "fiscal cliff" continued to grow, the FTSE 100 Index added 25.7 points to touch a new nine-month high at 5,961.6. In a quiet session for corporate news, shares in packaging group Bunzl were 46p lower at 1,020p after the packaging firm said underlying revenues growth for the year is expected to be a muted 2.5 per cent, causing broker Seymour Pierce to downgrade the shares to "reduce." In the insurance sector Aviva gained 5p to 380.8 buoyed by a £494m cash windfall from its split with Spain's Bankia. NEW YORK: Wall Street was still worried about the impending fiscal cliff, the leading indices closing down last night, but the market's modest loss shows that investors still expect a deal. The Dow Jones industrial average was down 99.22 points, or 0.74 per cent, closing at 13,251.74 while the broader Standard & Poor's 500 Index closed down 10.99 points, or 0.76 per cent, at 1,435.80. The Nasdaq Composite Index ended the day down 10.17 points, or 0.33 per cent, at 3,044.36.