British financial markets were laying bets that Scots would vote No on independence yesterday, pushing the pound to a two-year peak against the euro and Scotland-based stocks higher in the final hours of polling.

Since a poll almost two weeks ago showed a surge in support for the Yes campaign, worries have been growing that Scotland would vote for independence, sending a shock wave through Britain's political and financial system.

But as trading rooms got ready for an all-night vigil before the results were known early this morning, the polls started to shift. Sterling added to gains this week when the latest survey showed the No vote holding its slender lead.

The poll yesterday, published by London's Evening Standard as Scots began to vote, showed 53 per cent in favour of the status quo, versus 47 per cent for independence. In contrast to previous polls, undecideds were only 4 per cent.

"It seems people are growing reasonably confident of a No vote in Scotland," said Ian Gunner, portfolio manager at Altana Hard Currency Fund.

Sterling gained more than 0.7 per cent against the dollar to trade at $1.6409. That compared with a 10-month low of $1.6051 struck last week. It also gained to 78.53 pence per euro, its strongest in two years.

Out of 12 Scotland-based stocks in the FTSE 350, only two closed down. UK government bond yields rose, as traders backed a No vote they saw as clearing the way for the Bank of England to raise interest rates before elections next May.

Short sterling future contracts dated from the middle of next year fell, implying expectations of a higher rates over that period.

Analysts said much market chatter in the past two days had surrounded the short odds given by UK bookmakers on a No vote. Online betting platform Betfair has already paid out on a vote against independence.

Worries that Scotland’s departure from the 300-year old union with England would bolster other separatist movements have hit bond markets in Spain, where Catalonia has similar demands. Spanish 10-year yields, which fall when prices rise, were down three basis points at 2.27 per cent. Most other euro zone bond yields traded higher. – (Reuters)