World financial markets have rallied sharply on the prospects of Britain remaining in the European Union.

Sterling soared on expectations that Britain would remain in the EU, spiking in value by around a cent against the US dollar to its highest point this year.

Wall Street Street's Dow Jones industral average ended 1.3 per cent higher at 18,011, led by gains in financial stocks, as opinion polls showed a "remain" vote looked likely. In Europe, stocks also rallied on the back of opinion polls pointing to the UK staying in the union.

In the first few minutes of trading on the New Zealand share market, the S&P NZX-50 index had rallied by 28 points to 6850.


"The way that the market is going, it certainly believes that the United Kingdom has voted to remain," ANZ senior economist Philip Borkin said.

He said the New Zealand dollar was trading elevated levels, reflecting expectations that the vote would be positive.

"I think we should not say that we know the result yet, but by the way the market is behaving it certainly believes that the UK has decided to remain," Borkin said. By mid morning
the New Zealand dollar was at US72.59c from US72.44 US cents at 8am in Wellington from US71.80c in late trading on Thursday.