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The FTSE 100 stock index of the UK's biggest publicly-listed companies has reached a new record closing price.

The fresh all-time high was driven by a weaker pound and easing tensions in the Middle East.

The index closed on Monday at 8,023.87 points to mark the new record, surpassing its previous high of 8,012.53 in February last year.

It was up 1.62% at its close, with retailers M&S, Tesco, Sainsbury's and Ocado among the big risers of the day.

Shares have benefitted from a weaker pound because the index on the London Stock Exchange has many firms with big footprints overseas.

A weak pound makes goods they export cheaper for foreign buyers and helps inflate the value of business done elsewhere.

Rachel Winter, wealth manager at Killik & Co, said: "The FTSE contains a large number of big international companies that earn their revenue in dollars and report their profits in sterling.

"The strength of the dollar is due to sticky inflation in the US, which means that US interest rates will remain higher for longer."

The pound was down 0.2% at $1.234 as a result, representing sterling's lowest point against the US currency for around five months.

Axel Rudolph, senior market analyst at IG, said the "de-escalation in the Middle East" also played its part to propel the FTSE 100 to its new record.

Gaining strength

The index has been steadily ticking upwards in recent weeks on hopes the Bank of England will cut interest rates as inflation falls steadily back down to the central bank's 2% target rate.

By making borrowing less expensive, lower interest rates discourage saving and can increase borrowing for home purchases and business investments, helping to breathe life back into the economy.

It would be the first cut since March 2020.

Dan Coatsworth, investment analyst at AJ Bell, said: "The Bank of England is now expected to start cutting rates before the US Federal Reserve sharpens its knife and that's led to divergent fortunes for the respective currencies."

He added that the "favourite items on the menu to fill portfolios" included Marks & Spencer, which was the recipient of a positive broker note, alongside Next and Sainsbury's. "All three saw their ratings lifted from 'hold' to 'buy' as part of a review of the broader retail sector," he said.