BP Share News (BP.)

(Alliance News) - London stock prices at midday Tuesday continued to point to a second day of gains, supported by some surprisingly good Chinese economic data as well as share price gains for Melrose Industries and Imperial Brands, but the FTSE 100 was off its best levels of the morning.

The large-cap index was up 32.11 points, or 0.6%, at 5,595.85, though having traded above the 5,700 mark in the morning.

The FTSE 250 was up 322.391 points, or 2.2%, at 14,947.02, and the AIM All-Share was up 2.3% at 679.07.

The Cboe UK 100 was up 0.7% at 9,491.18, the Cboe UK 250 was up 2.3% at 12,927.51, and the Cboe Small Companies up 0.6% at 8,077.71.

In European equities on Monday, the CAC 40 in Paris was up 0.6%, while the DAX 30 in Frankfurt was up 1.2%.

"The wave of optimism continues to wash over markets, after a surprisingly-strong Chinese PMI figure overnight. China was able to put up hospitals for Covid-19 patients in a remarkably short space of time, but if this data is accurate then they have now accomplished something even more miraculous, namely stopping and then restarting a huge economy in the space of two months," said Chris Beauchamp, chief market analyst at IG.

Chinese factory activity saw surprise growth in March as businesses grind back to work following a lengthy shutdown.

The purchasing managers' index came in well above expectations, hitting 52.0 for March, according to the National Bureau of Statistics. That is well above the 35.7 from the month before and beat forecasts of 44.8 in a Bloomberg survey. Anything above 50 is considered expansion.

The NBS said the number "reflects that over half of surveyed companies had improvements in their resumption of work and production from the month before". However it added that "it does not represent that our country's economic operations have returned to normal levels".

The non-manufacturing PMI came in at 52.3, also well above analyst predictions.

Meanwhile, a mounting death toll from the coronavirus outbreak has the US poised to overtake China's total of 3,300 deaths.

Hard-hit Italy and Spain have already overtaken China and account for more than half of nearly 38,000 Covid-19 deaths worldwide, according to figures from Johns Hopkins University.

Italy and Spain saw their death tolls climb by more than 800 each on Monday, but the WHO's emergency chief said cases there are "potentially stabilising". At the same time, he warned against letting up on tough containment measures.

In New York City, Governor Andrew Cuomo and health officials warned that the crisis unfolding there is just a preview of what other US communities could soon face. New York State's death toll climbed by more than 250 people in a day on Monday to more than 1,200, most of them in the city.

Stocks in the US are set for a positive open on Tuesday. The Dow Jones Industrial Average is pointed up 0.4%, the S&P 500 up 0.5%, and the Nasdaq Composite up 0.9%.

In currency markets, the US dollar was stronger against most majors.

The pound was quoted at USD1.2341 Tuesday midday, down from USD1.2404 at the London equities close on Monday.

Against the yen, the dollar was trading at JPY108.53 on Tuesday, up from JPY107.93 late Monday. The euro was quoted at USD1.0966, lower than USD1.1042.

In European economic data, the eurozone's inflation rate slumped sharply in March on energy prices.

Flash figures anticipate the annual inflation rate for the bloc to be just 0.7% in March, down from 1.2% in February. FXStreet consensus had pencilled in an inflation rate of 0.8%.

Energy prices fell 4.3% in March, Eurostat highlighted, having fallen just 0.3% in February. Oil prices have been pushed to their lowest levels in 17-years amid a fall in demand due to Covid-19 and a Saudi-led price war.

Brent oil was quoted at USD27.20 a barrel at midday, sharply higher than USD22.09 late Monday. The North Sea benchmark fell to USD21.65 overnight - its lowest level in 18 years.

"Rumours about talks between Putin and Trump, will include discussions on the oil price, are giving some hope to the barrel amid a backdrop of its dramatic performance YTD that shows a loss of 60% while a huge oversupply risk continues to dominate sentiment," said Carlo Alberto De Casa, chief analyst at ActivTrades.

London's oil majors were higher at midday, with BP up 3.1% and Royal Dutch Shell 'A' shares up 3.7% and 'B' shares up 4.4%.

In an unscheduled update on Tuesday, Shell warned it expects to take post-tax impairment charges in a range of USD400 million to USD800 million in the first quarter, following the slump in oil prices.

The Anglo-Dutch firm said the impairment guidance was based on changes to its oil price outlook for 2020.

Elsewhere in the commodity space, gold was quoted at USD1,601.61 an ounce, down from USD1,619.47.

The top performer in the FTSE 100 on Tuesday was Melrose Industries, up 13%, rebounding after an 18% slump on Monday.

The industrial turnaround specialist just minutes before the London market close on Monday said it has suspended the payment of its final dividend for 2019 of 3.4 pence per share due to the Covid-19 pandemic.

Melrose said it has suspended the payment of its final dividend for 2019 of 3.4 pence per share due to the Covid-19 pandemic.

Imperial Brands rose 13% after the tobacco firm said that it has seen no material impact on performance to date from Covid-19 pandemic, and current trading remains in-line with expectations.

"Our operations benefit from a diversified supply chain and factory footprint, which is prioritising the manufacture of major product lines to build contingency stocks. Our distribution business, Logista, which serves Italy, France and Spain has increased the levels of finished goods stock in its regional distribution hubs and continues to deliver product to retailers," the Davidoff cigarette maker said.

The FTSE 100-listed company also said that it has secured a new EUR3.5 billion multi-currency revolving credit facility from a syndicate of 20 banks.

Flutter Entertainment was up 9.8% as it got approval for its proposed merger with peer Stars Group from the UK Competition & Markets Authority.

The UK regulator said that although both companies compete strongly, the presence of other competitors like bet365 and William Hill means the merger will not worsen the offering to people who choose to bet online.

FTSE 100-listed Flutter welcomed the phase one merger clearance, but said the merger is still subject to approval by both Flutter shareholders and Stars group shareholders at general meetings scheduled in April.

Smiths Group rose 4.5% despite delaying the separation of its Smiths Medical division.

Smiths Medical makes products such as catheters, thin medical tubes which can be used in surgical procedures. It was originally set to be demerged by June. However, due to the company making ventilators for the UK government, coupled with uncertainty created by Covid-19, Smiths has decided to delay the separation.

On recent trading, Smiths said continuing operations delivered underlying revenue growth of 3% for the six-month period to the end of January. Reported revenue increased 8%, including the acquisition of fluid management business United Flexible.

However, for the eight weeks to the end of March, the company recorded disruptions to trading amid the new coronavirus outbreak. Demand, as well as the company's supply chain and production have been hurt. All its manufacturing sites in China have now reopened and are operating at close to normal levels, Smiths noted.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.