CMC Markets analyst Michael Hewson said: "Markets are hoping that the coronation of Rishi Sunak as the next UK Prime Minister will help draw a line under the events of recent days, as the new PM elect warned his party that they needed to unite or die. This may prove to be a tall order, given the Tories propensity for fratricide over the years.

"Given recent events it’s likely that the old divisions may well reassert themselves in the coming days, as things settle down, or if the polls don’t improve, however given recent events it would be quite something to see an immediate rebound in the government’s political fortunes.

"The fall in UK gilt yields does suggest one thing and that is we will probably see a budget delivered next week and all the indications are it will be delivered by Jeremy Hunt, the existing Chancellor of the Exchequer. It would be highly unsettling for markets if Hunt was removed this close to Monday’s budget, however given the Tories recent propensity for shooting themselves in the face, anything is possible."

Sunak is set to pick his new Cabinet on Tuesday, with Jeremey Hunt widely expected to be kept on as Chancellor.

In corporate news, HSBC (LON:HSBA) said it had appointed Georges Elhedery, a former head of its investment bank, as its new chief financial officer as it posted a 42% fall in third quarter profits due to rising loan losses and asset sales.

The bank posted a pre-tax profit of $3.15bn for the three months to September. 30, down from $5.4bn last year, but above the $2.45bn consensus of analyst estimates compiled by the bank.

Results also included a $2.4bn hit from the sale of the bank's business in France as part of a pivot to Asia by HSBC in an effort to boost profits.

Premier Inn parent company Whitbread (LON:WTB) said that interim profits had exceed pre-pandemic levels, leaving the group "significantly ahead" of the wider UK market.

Whitbread said first-half statutory revenues had surged 104% year-on-year to £1.35bn, helping the group swing from an interim adjusted pre-tax loss of £56.6m in 2021 to an adjust of pre-tax profit of £271.9m a year later.