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(Alliance News) -Â London share prices rose on Monday as traders bid up banking stocks ahead of a likely UK interest rate hike this week, though jitters over higher mortgage costs knocked housebuilders.
The FTSE 100 index of large-cap stocks was up 24.27 points, or 0.3%, at 7,261.84 midday Monday. The mid-cap FTSE 250 index was up 83.24 points, or 0.4%, at 23,189.85. The AIM All-Share index was up 2.66 points, or 0.2%, at 1,225.84.
The Cboe UK 100 index was up 0.3% at 719.93. The Cboe 250 was flat at 20,759.11, and the Cboe Small Companies up 1.0% at 15,539.52.
In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were up 0.9% and 0.8% respectively on Monday.
"European markets have kicked off proceedings on a positive footing, with sentiment clearly following on from Friday's US close," said Joshua Mahony, senior market analyst at IG.
Building on Friday's gains - which saw all three major New York indices close at fresh records - Wall Street is set for a strong start to the new week. The Dow Jones is called up 0.5%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.9%.
Investors are gearing up for a busy week, with a likely taper announcement from the US Federal Reserve on Wednesday and the possibility of a UK interest rate hike from the Bank of England on Thursday.
Ahead of the Fed, Monday's US PMI data will be closely watched. The IHS Markit purchasing managers' index is at 1345 GMT, followed by the ISM manufacturing report at 1400 GMT.
In the UK, the latest manufacturing PMI showed expansion picked up in October, but growth was held back by supply chain issues.
The IHS Markit/Chartered Institute of Procurement & Supply PMI for October was 57.8 points, up from 57.1 in September. The PMI moved further above the no-change line of 50.0 last month, indicating growth accelerated. The final reading also improved upon October's flash figure of 57.7.
However, the headline index reading masked difficult conditions for the sector in October.
"Although the PMI was boosted by improved growth of new orders and employment, alongside a steeper rise in stocks of purchases and lengthier vendor lead times, a further slowdown in output growth held back the headline index," said IHS Markit.
Sterling was quoted at USD1.3652 on Monday following the data, down from USD1.3697 at the London equities close on Friday. The euro traded at USD1.1569, firm against USD1.1564 late Friday.
Against the yen, the dollar rose to JPY114.26 versus JPY114.02.
Prime Minister Fumio Kishida declared victory on Monday after his ruling coalition won a strong majority in Japan's national elections, vowing to boost the virus-hit economy and "take a leading role" in Asia's push towards carbon neutrality.
Gold was quoted at USD1,783.54 an ounce on Monday, higher than USD1,778.08 on Friday. Brent oil was trading at USD83.55 a barrel, down from USD84.27 late Friday.
In London, BT Group was helping to push up the FTSE 100, the telecommunications stock rising 4.3% after confirming it has delivered on its GBP1 billion of gross annualised cost savings 18 months ahead of a March 2023 target.
Banks were rising ahead of Thursday's anticipated UK interest rate hike. Standard Chartered was up 2.2%, NatWest up 1.7% and Lloyds Banking Group up 1.7%.
NatWest and Lloyds were also boosted by ratings upgrades on Monday, the former raised to Hold from Sell by Investec and the latter to Outperform from Neutral from Exane BNP.
One bank left was Barclays, down 1.6% on the departure of its chief executive following a probe by UK regulators into his relationship with disgraced late financier Jeffery Epstein.
The London-based bank said Jes Staley is stepping down as CEO in order to contest findings into his description of his relationship with Epstein. Barclays noted that the probe has made "no findings that Staley saw, or was aware of, any of Epstein's alleged crimes". The lender said that was the basis of its support for Staley following Epstein's arrest in the summer of 2019.
Back in February of last year, Barclays said Staley was "sufficiently transparent" about the nature of his relationship with Epstein, who killed himself in a New York jail in August 2019 while awaiting trial on sex-trafficking charges.
Barclays has appointed CS Venkatakrishnan, known as Venkat, as its new CEO, effective Monday. Barclays said it has had succession planning in hand "for some time" and identified Venkatakrishnan, head of Global Markets and co-president of Barclays Bank PLC, as its preferred candidate over a year ago.
Also in the red were housebuilders, with Barratt Developments down 3.8%, Berkeley Group down 3.2% and Persimmon down 3.0%.
IG's Mahony said Monday's housebuilder wobble comes as investors eye Thursday's BoE meet and the prospect of higher interest rates raising mortgage costs.
"Thursday's Bank of England rate decision represents one of the most important events of the week for traders, with markets signalling a 57% chance that we will see the first rate rise since 2018," said Mahony. "However, it is the longer-term outlook which holds particular interest for the housebuilders, with traders seeing a 59% chance that rates will top 1% by June 2022."
Elsewhere in London, shares in U&I jumped 72% to 148.18 pence, after a takeover offer from FTSE 100-listed Land Securities worth GBP190 million.
LandSec has offered 149p per U&I share, representing a 73% premium to Friday's closing price of 86p. The deal has been unanimously endorsed by U&I directors, LandSec said.
The company noted that U&I provides access to a pipeline of mixed-use development schemes, of which two are well-progressed through planning. LandSec said it believes that it can accelerate the pace of development of these two.
LandSec shares were up 0.7% at midday.
By Lucy Heming;Â lucyheming@alliancenews.com
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