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(Alliance News) - The pound and UK-centric London stocks got a boost after the UK and EU reached a draft Brexit agreement on Thursday, though it remains yet to be seen if UK Prime Minister Boris Johnson can get his deal through Westminster.
The FTSE 100 stock index was 41.83 points, 0.6%, higher at 7,209.78 Thursday midday. The FTSE 250 was up 106.95 points, or 0.5%, at 20,294.91 and the AIM All-Share 0.6% higher at 884.65.
The Cboe UK 100 index was up 0.6% at 12,231.64. The Cboe UK 250 was up 0.4% at 18,236.25 and the Cboe UK Small Companies 0.2% higher at 11,084.12.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 0.5% and up 0.7% respectively in early afternoon trade.
The pound surged as EU Commission President Jean-Claude Juncker said the UK and EU have reached a Brexit deal.
On Twitter, Jucker wrote: "Where there is a will, there is a #deal - we have one!"
He described the agreement as "fair and balanced" and said it was a "testament to our commitment to find solutions". "I recommend that #EUCO endorses this deal," he wrote.
UK Prime Minister Johnson tweeted: "We've got a great new deal that takes back control - now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment."
The announcement came as Johnson was heading for a crunch EU summit in Brussels and follows days of intense negotiations.
Craig Erlam at Oanda questioned how straightforward the process will be from here.
"With Labour whipping for a second referendum on the deal and the Lib Dems unlikely to support anything, there is still a good chance we're heading for an extension and election, in order to get this over the line. Nothing in Brexit is ever simple," said Erlam.
"It's going to be a wild weekend which will make the market open next week all the more unpredictable," he added. "If the deal gets through Parliament, the pound could perform extremely well at the start of next week, despite having already rebounded more than 8% from the lows a month ago."
With the House of Commons expected to sit on Saturday to discuss the draft agreement – the first weekend session for 37 years – Northern Ireland's DUP insisted it still could not yet back the government's Brexit plans. Labour leader Jeremy Corbyn also has dismissed the deal.
The pound initially shot above the USD1.29 mark on the news before falling back slightly to trade around USD1.2892 at midday versus USD1.2834 at the London equities close on Wednesday.
Banks heavily exposed to the UK economy got a boost on news of the draft agreement, with Barclays up 3.0%, Royal Bank of Scotland up 2.1% and Lloyds Banking up 2.2%.
Elsewhere in the FTSE 100, Rentokil Initial was up 1.9% after the pest control and hygiene business recorded its highest level of quarterly organic growth in over a decade.
Revenue from continuing operations, or ongoing revenue, for the three months to September 30 increased 14% year-on-year to GBP723.0 million, with organic revenue rising 5.5% versus 4.1% a year ago.
WH Smith shares advanced 7.8% on plans to expand further into the lucrative US travel retail market.
WH Smith has agreed to buy travel retailer Marshall Retail for USD400 million, or around GBP312 million. Marshall Retail operates 170 stores in North America, with 59 of these inside airports.
This acquisition comes almost exactly a year after WH Smith announced the purchase of US-based travel retailer InMotion Entertainment for USD198 million. It will be paid for with a share issue and new debt facilities.
Turning to annual results, WH Smith's revenue for the year to August 31 rose 11% to GBP1.40 billion from GBP1.26 billion, while pretax profit edged up to GBP135 million from GBP134 million. Travel total revenue was up 22%, or 8% higher when stripping out InMotion, and 3% higher on a like-for-like basis.
Bunched at the bottom of the FTSE 250 were Rathbone Brothers, Moneysupermarket.com and Grafton Group.
Wealth manager Rathbone was down 9.0% at midday after posting modest growth in managed assets amid difficult markets.
The company's total funds under management & administration increased 4.4% to GBP49.4 billion at September 30 from GBP47.3 billion a year ago. The core Investment Management business saw assets rise year-on-year to GBP42.4 billion from GBP41.3 billion, while the Unit Trusts business assets totalled GBP7.0 billion versus GBP6.0 billion.
Moneysupermarket.com slid 8.9% after the price comparison website said revenue growth in the third quarter slowed significantly from the pace set earlier in the year.
For the three months ended September, revenue rose 4% on a year prior to GBP100.9 million. This was driven by robust 3% growth in Insurance revenue to GBP49.9 million.
For the nine months ended September, revenue grew 11% on the year prior to GBP300.2 million. That pace of growth indicated that third-quarter growth saw a significant slowdown. This was after Money revenue grew 40% on the year prior and Home Services up 41%, with Insurance reporting a 3% increase in revenue.
Grafton Group declined 7.9% as the builders merchant warned 2019 profit will be lower than market forecasts.
For the three months ended September, reported revenue expanded 4.5%, with like-for-like revenue 0.9% higher on the year prior. The Dublin-based firm explained that after an "encouraging" start, "trading towards the end of the quarter and more recently has been impacted by a softening in activity".
For 2019, Grafton now expects operating profit to be between 4% and 8% lower than the GBP206.4 million post-IFRS and GBP193.5 million pre-IFRS consensus market estimates.
In the US, stocks are called for a higher open as earnings season continues. The Dow Jones and S&P 500 are both seen 0.4% higher, and the Nasdaq up 0.5%.
Bank Morgan Stanley will report third-quarter results on Thursday, as will tobacco major Philip Morris International.
By Lucy Heming; lucyheming@alliancenews.com
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