Markets have begun the day higher after the deal for Silicon Valley Bank eased concerns about the banking sector.

The FTSE 100 has climbed 1pc after the open to 7,482.20 and the FTSE 250 has climbed 0.8pc to 18,642.04.

Barclays has raised its prediction for the peak of interest rates following the Bank of England's 11th straight hike last week.

The lender lifted its terminal rate forecast by a quarter point to 4.5pc, having expected a pause in the series of rate rises last week following the global banking sector concerns.

Amid rising inflation, the British bank retained its call for another quarter percentage point hike in May.

Barclays also raised its forecast for UK economy, with its economists led by Marian Cena saying its predictions now imply a "minimal recession".

They expect 2023 GDP to contract by 0.3pc year-on-year.

Following the hikes this year, Barclays projects 100 bps of cuts to the BoE's bank rate in the second half of next year, 50 bps more than its previous prediction. It sees the rate ending at 3.5pc next year.

SVB's collapse sparked a crisis of confidence among the customers of similarly sized US banks, with many withdrawing their money and depositing it into bigger institutions seen as too big for the government to not bail them out in a crisis.

The turmoil also spread to Europe, where troubled Swiss lender Credit Suisse was taken over by UBS.

Most recently, shares in long-troubled Deutsche Bank fell heavily on Friday on the lender's surging cost of default cover, reigniting fears about a widening banking sector crisis.

Despite global contagion fears, central banks have pushed on with monetary tightening as they focus on fighting inflation - even though the troubles in the banking sector have been linked to their rate hikes.

The buyer for large chunks of Silicon Valley Bank's deposits and loans has helped cast an uneasy calm over fragile markets, which have been roiled by worries of a credit crunch and systemic bank stress.

First Citizens Bank bought all the loans and deposits of SVB and gave the Federal Deposit Insurance Corp equity appreciation rights in its stock worth as much as $500m in return, the FDIC said in statement.

Seventeen former SVB branches will open as First Citizen branches on today. 

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2) Vanguard backs Britain with plans to open its second office World’s second-biggest fund manager will create 100 jobs in the UK

3) Former John Lewis boss warns against ownership ‘tragedy’ Retailer criticised for plans that could result in selling a stake to an outside investor

4) City investor gears up to unleash post-Brexit investment ‘big bang’ Life insurer redeploys dozens of employees to examine what projects it can invest in

5) Britain’s electric car fate is sealed without homegrown batteries UK must reach deep into its pocket to keep carmakers from moving abroad

What happened overnight

Asian shares fluctuated in cautious trading, with the deal for Silicon Valley Bank easing the turmoil on markets.

Tokyo stocks closed higher, with the benchmark Nikkei 225 index rising 0.3pc to end at 27,476.87, while the broader Topix index also added 0.3pc to 1,961.84.

However, Chinese markets declined after the government reported that industrial profits fell nearly 23pc in the first two months of the year from a year earlier.

Hong Kong's Hang Seng gave up 0.5pc to 19,815.03 and the Shanghai Composite index lost 1.1pc to 3,231.28.