London close: Stocks extend bounce, but some traders wary

Thu 31 Aug 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks extended their recent bounce helped along by a strong showing in the mining sector after better-than-expected Chinese manufacturing data and a fifth session of gains for the benchmark S & P 500 in the States - although some observers remained unconvinced.
"Equity markets in Europe are extending yesterday's rally as the nervousness surrounding North Korea has waned for now. Make no mistake, the standoff between Pyongyang and Washington DC is still ongoing, but while tempers are somewhat at a standstill, the bullish sentiment will continue. Traders are using the halt in hostilities as an opportunity to pick up stocks, but how long will the buying momentum last?," said David Madden, market analyst at CMC Markets UK.

At the closing bell, the FTSE 100 was up 0.89% or 65.36 points to 7,430.62, even as Brexit concerns continued to weigh on the pound. The currency was down 0.26% versus the dollar at 1.2892 and by 0.4% against the euro at 1.0836.

Speaking after meeting the UK's Brexit minister David Davis, the European Union's point man for Brexit, Michel Barnier, said he was "quite far" from being able to recommend EU leaders start the second phase of talks when they meet in October, adding that there still did not seem to be mutual trust between the two sides.

Fortunately, a favourable reading on Chinese factory data, a degree of optimism regarding the prospect for tax reforms in the States and the launch of labour market reforms in the key euro area economy of France acted as an offset.

Market participants were also digesting comments from Bank of England rate setter Michael Saunders, who explained the thinking behind his recent votes for higher interest rates in a speech in Cardiff. Saunders, an external member of the Bank's Monetary Policy Committee, said "a modest rise" in interest rates is needed to return currently high inflation sustainably back to its 2% target.

Speaking at the Park Plaza Hotel in the Welsh capital, Saunders, who voted in the June and August MPC meetings to lift Bank Rate by 25 basis points after voting for no change at earlier meetings, said the trade-off between above-target inflation and below-potential output had "shifted markedly" in recent quarters.

Mining stocks were among the best performers, with Anglo American, Rio Tinto and Glencore all in the black after China's official manufacturing purchasing managers' index for August printed at 51.7, up a touch from 51.4 in July and above expectations for a nudge down to 51.3. A reading above 50 indicates expansion.

Elsewhere, Restaurant Group surged after it sales deteriorated as the first half of the year wore on, but the Frankie & Benny's and Garfunkel's owner served up a flat dividend as it reported early signs of improvement and broke back into the black. Many analysts had been expecting another profit warning.

Building materials distributor Grafton was in the black after it said interim pre-tax profits rose 18% to 74.1m, but it warned that recent softer trends in the UK economy are likely to be sustained over the remainder of the year.

Recruiter Hays pushed higher as it posted a rise in full-year profit and announced its first special dividend following a solid performance in Europe and a stabilisation in the UK.

Serco was boosted by an upgrade from UBS, but G4S was hit by a downgrade from the same outfit. Provident Financial slipped after Jefferies downgraded its stance on the stock and as it was ejected from the FTSE 100 in the latest quarterly reshuffle.

Ladbrokes reversed earlier gains to trade lower despite reporting a strong start of the year and a 7% jump in first-half operating profit.

Melrose Industries suffered heavy losses after swinging to a profit in the first half of the year but warning that conditions at its Brush unit had worsened, while Jimmy Choo was flat despite reporting a 174% jump in first-half profit.

G4S, Hammerson, St James's Place, Croda, Stagecoach, Auto Trader and Wood Group were all weaker as their stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,430.62 0.89%
FTSE 250 (MCX) 19,803.59 0.95%
techMARK (TASX) 3,418.60 0.98%

FTSE 100 - Risers

Mediclinic International (MDC) 764.50p 2.89%
Anglo American (AAL) 1,402.50p 2.82%
Hargreaves Lansdown (HL.) 1,400.00p 2.71%
Whitbread (WTB) 3,758.00p 2.62%
Shire Plc (SHP) 3,833.50p 2.32%
Centrica (CNA) 199.90p 2.25%
Smurfit Kappa Group (SKG) 2,362.00p 2.12%
Next (NXT) 4,129.00p 2.05%
AstraZeneca (AZN) 4,541.00p 1.98%
Antofagasta (ANTO) 1,035.00p 1.97%

FTSE 100 - Fallers

G4S (GFS) 283.50p -3.21%
St James's Place (STJ) 1,153.00p -1.45%
Provident Financial (PFG) 857.50p -1.01%
Tesco (TSCO) 180.90p -0.82%
Hammerson (HMSO) 561.00p -0.71%
Ashtead Group (AHT) 1,663.00p -0.54%
Croda International (CRDA) 3,842.00p -0.44%
Micro Focus International (MCRO) 2,273.00p -0.35%
Standard Chartered (STAN) 770.00p -0.32%
Fresnillo (FRES) 1,616.00p -0.25%

FTSE 250 - Risers

Restaurant Group (RTN) 346.50p 8.93%
Serco Group (SRP) 117.70p 8.38%
TBC Bank Group (TBCG) 1,686.00p 8.29%
TP ICAP (TCAP) 493.60p 6.26%
Evraz (EVR) 335.20p 6.24%
Hays (HAS) 183.00p 5.90%
Euromoney Institutional Investor (ERM) 1,096.00p 5.15%
Millennium & Copthorne Hotels (MLC) 468.40p 3.90%
Pagegroup (PAGE) 511.00p 3.82%
CLS Holdings (CLI) 222.20p 3.78%

FTSE 250 - Fallers

Polymetal International (POLY) 884.50p -5.45%
Melrose Industries (MRO) 220.00p -4.06%
Stagecoach Group (SGC) 167.10p -3.02%
Carillion (CLLN) 43.90p -2.97%
Centamin (DI) (CEY) 151.50p -2.13%
Elementis (ELM) 269.60p -1.86%
Spectris (SXS) 2,314.00p -1.70%
AA (AA.) 160.00p -1.60%
Spire Healthcare Group (SPI) 324.60p -1.40%
Dixons Carphone (DC.) 173.40p -1.31%
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