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(Alliance News) - Stocks in London ended mostly higher with banks leading the FTSE 100 as US bond yields advanced, while Deliveroo's high-profile initial public offering was dealt a further blow.
The 10-year US Treasury yield stood at 1.75% late Tuesday in London, widening from 1.71% at the same time on Monday. The yield had jumped above 1.77% overnight, reaching its widest point since January 2020.
The FTSE 100 index closed up 35.95 points, or 0.5%, at 6,772.12. The FTSE 250 ended up 138.90 points, or 0.7%, at 21,574.44. The AIM All-Share closed down 2.25 points, or 0.2%, at 1,191.61.
The Cboe UK 100 ended up 0.6% at 676.29, the Cboe UK 250 closed up 0.6% at 19,281.02, and the Cboe Small Companies ended flat at 13,879.13.
Both the CAC 40 in Paris closed up 1.2%, while the DAX 30 in Frankfurt ended up 1.3% - at fresh record-setting levels.
"Markets in Europe have continued to focus on the recovery narrative, putting aside concerns over recent events in the US and last week's block trade blow out, as well as the economic picture in Europe which continues to look dire as infection rates rise further," said CMC Markets analyst Michael Hewson.
In the FTSE 100, banks ended among the best performers amid widening bond yields and as the furore surrounding troubled fund Archegos Capital eased. Banks seeking to lend money can see interest income improve when long-dated yields rise.
NatWest, Barclays, Lloyds, HSBC and Standard Chartered closed up 4.0%, 4.9%, 3.0%, 2.5% and 2.3% respectively.
"Financials are leading the gainers, despite concern about their exposure to the Archegos Capital blow up, with Credit Suisse lower again, with the rest of the sector gaining on the back of higher yields led by the likes of Barclays whose shares are back up close to last week's high and their best levels in over a year. Lloyds Banking Group shares are also higher, still below their pre pandemic peaks but still looking good for further gains and making new one-year highs," Hewson explained.
At the other end of the large-caps, precious metal miners Fresnillo and Polymetal International closed down 4.1% and 1.7% respectively, tracking spot gold prices lower.
Gold was quoted at USD1,685.50 an ounce at the London equities close, sharply lower against USD1,711.45 late Monday, amid dollar strength.
"Underscoring investors' insatiable appetite for risk, gold was continuing to struggle as it dipped below USD1700 again as the opportunity cost of holding the metal rose with yields breaking out. Precious metals were also undermined by ongoing strength of the US dollar, with the greenback also pressurising some emerging market currencies," said ThinkMarkets analyst Fawad Razaqzada.
AstraZeneca finished down 1.4% after the German state of Berlin said it is again suspending the use of the drugmaker's coronavirus vaccine for people under 60 due to reports of blood clots. In addition, Canada on Monday suspended use of AstraZeneca's Covid vaccine for those under 55 amid blood clot fears.
Imperial Brands ended 1.3% lower. The tobacco company said trading is in line with its expectations and it will meet its guidance for the 2021 financial year.
The Davidoff and West cigarettes maker expects "low to mid-single digit organic adjusted operating profit growth at constant currency" for the financial year ending September 2021, in line with guidance from November.
Meanwhile, Amazon-backed Deliveroo faces a stock market launch that will value the app-driven meals delivery firm at GBP7.6 billion, a source close to the matter said Tuesday.
Deliveroo's initial public offering due Wednesday will be priced at GBP3.90 per share, according to the source. On Monday, Deliveroo narrowed its share price range to between GBP3.90 and GBP4.10 per share.
The firm blamed "volatile" market conditions - which comes after a week in which a raft of leading fund managers said they will reject the listing amid concerns over workers' rights.
Last week, the company said it intended to offer a range of between GBP3.90 and GBP4.60 per share, which could have potentially valued the business up to GBP8.8 billion.
In addition, fund managers have raised concerns over Deliveroo's share structure, which will see its founder Will Shu have 20 votes per share, compared with one per share for other investors, giving him a majority position at shareholder votes.
Stocks in New York were lower at the London equities close as a rise in bond yields renewed investor concerns about inflation in an economy emerging from the pandemic.
The DJIA was down 0.3%, the S&P 500 index down 0.5% and the Nasdaq Composite down 0.8%.
The move came as investors weighed continued optimism over the US's vaccine rollout and another plan to boost the economy.
US President Joe Biden on Wednesday is expected to unveil his much-anticipated infrastructure bill in Pittsburgh, Pennsylvania - tipped to be worth as much as USD4 trillion and follows his vast stimulus package.
The expected spending spree by the US government comes as Biden pledged that 90% of adults will be eligible for vaccination by April 19. His goal of getting 200 million people jabbed within his first 100 days also appeared to be well on course.
Still, the threat that the economic reopening will see a huge jump in spending continues to weigh on market sentiment as investors fear it will force the US Federal Reserve to raise interest rates earlier than 2024, as originally anticipated.
Investors are unloading US government debt "on persistent expectations for economic growth and inflation," said Patrick O'Hare at Briefing.com.
The dollar was in demand against major counterparts as treasury yields widened. The pound was quoted at USD1.3722 at the London equities close, down from USD1.3790 at the close on Monday.
The euro stood at USD1.1730 at the European equities close, down from USD1.1761 late Monday. Against the yen, the dollar was trading at JPY110.27, up from JPY109.77 late Monday - hitting the JPY110 mark for the first time in a year.
Brent oil was quoted at USD64.21 a barrel at the equities close, up from USD63.85 at the close Monday.
The economic events calendar on Wednesday has UK economic growth figures at 0700 BST, Germany unemployment data at 0855 BST and eurozone inflation readings at 1000 BST.
The UK corporate calendar on Wednesday has trading statements from Topps Tiles, Wincanton and Numis.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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