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Company shares soar on Tory victory, removal of Labour nationalization risk

Politically sensitive shares have responded to the Conservative election victory in the U.K., with industries no longer under the threat of nationalization from a Labour government soaring.

Prime Minister Boris Johnson's emphatic victory has returned him to power holding a large majority, with Labour slumping to its worst defeat in decades.

This means there is no possibility of Labour's planned nationalization of parts of telecoms firm British Telecom or of the water industry and other utilities including rail and energy going ahead.

Nor will its plans for obligatory employee representation on company boards or its scheme for employee ownership of a 10% stake in major firms, or its support for a financial transaction tax. Labour had also planned to raise corporation tax if elected.

With the threat of nationalization of its broadband arm removed, BT's shares had jumped 6.98% as of mid-afternoon on Dec. 13.

Meanwhile, water company Severn Trent PLC saw its shares rise by 8.15%, United Utilities Group PLC's shares rose by 7.33%, and Pennon Group PLC's by 8.57%.

National Grid PLC, the power supply firm also under threat from Labour, saw its shares rise by 5.62%.

Labour had also said it would halt the privatization of Royal Bank of Scotland Group PLC, which remains 62% state-owned after its £45 billion bailout during the financial crisis, and RBS' shares were up 10.68%.

Other U.K. banks were also part of the bounce with Barclays PLC up 7.60% and Lloyds Banking Group PLC up 6.50%. HSBC Holdings PLC, which unlike the others is a truly international bank with extensive interests in Asia, saw its shares rise 0.40%.

Greater certainty that Brexit will go ahead at the end of next month, albeit with the final shape of a deal with the EU to be finalized, has also contributed to a sharp jump in shares.

Britain's FTSE 250 index of medium-sized U.K.-focused companies surged by 5% by mid-morning of the Conservative election victory, gaining over a 1,000 points to 21,910, an all-time record. It subsequently slipped back to a gain of 3.51% by mid-afternoon.

The FTSE 100 of the U.K.'s biggest companies, many of which report earnings in foreign currencies and have benefited from weaker sterling since the referendum, had also risen, though by considerably less at 1.48% in mid-afternoon trading.