London stocks opened higher on Tuesday as lenders rose after fears of a banking crisis appeared to ease, while the focus shifted to the US Federal Reserve ahead of its rate-setting meeting.

The blue-chip FTSE 100 advanced 0.8% by 0812 GMT, extending gains after rising nearly 1% on Monday.

Fears of a global banking meltdown looked to ease after Swiss lender UBS agreed to buy its beleaguered rival Credit Suisse for $3.23 billion over the weekend. British banks climbed 1.0% in early trading, with Barclays among the top gainers, last up 2.5%.

Weakness in the pound also aided the exporter-heavy FTSE 100.

Investor focus would now shift towards the US Federal Reserve as the two-day monetary policy meeting begins later today.

The more domestically-focussed FTSE 250 midcap index added 0.9%.

London stocks drop as Credit Suisse crisis reignites bank selloff

Among individual stocks, home improvement retailer Kingfisher rose 1.3% after reporting its full-year earnings.