Burberry Share News (BRBY)

(Alliance News) - London stocks remained in the green at midday on Wednesday with an improved global political environment helping sentiment, demonstrated by gains for Hong Kong-exposed equities following a decision to withdraw a controversial extradition bill.

The situation in Westminster remain considerably more unsettled.

The FTSE 100 index of London large-caps was 22.26 points, or 0.3%, higher at 7,290.45 Wednesday midday. The FTSE 250 was 102.28 points higher, or 0.5%, at 19,566.42, while the AIM All-Share was up 0.4% at 877.12.

The Cboe UK 100 index was 0.4% higher at 12,365.86. The Cboe UK 250 was 0.7% higher, at 17,424.69, and the Cboe UK Small Companies was down 0.1% at 10,833.18.

The FTSE 100 was higher despite the pound steadily gaining throughout the session, trading near to the USD1.21 mark early on but approaching USD1.22 as midday neared.

"Normally such gains for the pound would spell a miserable morning for the FTSE. However, good news elsewhere allowed the UK index to largely keep instep with its Eurozone peers," said Connor Campbell at Spreadex.

"Firstly, the confirmation of a new government in Italy; secondly, a better than forecast services PMI from China, a reading that has temporarily allayed some of investors' trade war impact concerns," he observed, adding: "Now all the market has to do is keep hold of these gains..."

In addition, news that Hong Kong's embattled pro-Beijing leader will permanently shelve a loathed extradition bill that lit the fuse for three months of pro-democracy protests has promised some calm in that key financial centre.

"The government will formally withdraw the bill in order to fully allay public concerns," Hong Kong Chief Executive Carrie Lam said in a video statement released via her office.

Back to the UK, the pound was higher after MPs in Westminster defeated the government to wrest control of the Commons agenda last night.

Tory rebels defied the whip to join opposition parties in a move which will see them take control of business in the House on Wednesday in a bid to stop the UK crashing out of the EU on October 31.

Wednesday is set to be yet another dramatic day in the Commons, with UK Prime Minister Boris Johnson due to take his first Prime Minister's Questions at noon before the Chancellor Sajid Javid sets out public spending plans.

MPs will then debate the draft legislation put forward by a cross-party group which would require a delay to Brexit unless there was a deal or Parliament explicitly backed leaving the EU without one by October 19.

A vote on a general election could be held later in the day.

"Recent developments, while not altogether unexpected, have slightly reopened the second referendum door if a new election sees the Conservatives under-perform. This has brought some reprieve to the pound," said Craig Erlam at Oanda.

Sterling was quoted at USD1.2193 Wednesday midday, up from USD1.2082 at the London equities close on Tuesday.

The UK currency's rise on Wednesday came despite data showing the country's dominant services sector lost momentum in August, raising the chances the economy is slipping into recession.

The IHS Markit/CIPS UK services purchasing managers' index registered 50.6 in August, down from 51.4 in July.

The index has posted above the 50.0 no-change mark for five consecutive months, but the latest reading represented the lowest since June and was well below the long-run average of 54.9.

Chris William, chief business economist at IHS Markit, commented: "So far this year the services economy has reported its worst performance since 2008, with worrying weakness seen across sectors such as transport, financial services, hotels and restaurants, and business-to-business services."

"After surveys indicated that both manufacturing and construction remained in deep downturns in August, the lack of any meaningful growth in the service sector raises the likelihood the UK economy is slipping into recession," he added.

The PMI surveys so far are indicating the UK economy will contract 0.1% in the third quarter, said Williamson.

However, Samuel Tombs at Pantheon Macroeconomics cautioned: "Don't take the PMI's recession signal literally."

"Taken at face value, the PMI suggests that the dominant services sector of the economy is treading water...the chances of a second consecutive drop in GDP, however, are remote, given that inventories will shift from dragging on GDP growth in Q2 to boosting it in Q3," he said.

Tombs added: "In addition, the PMIs are excessively influenced by business sentiment and have given a misleadingly weak steer during the past 12 months of heightened political uncertainty."

In the eurozone, private sector growth remained sluggish in August, though showing an improvement on the earlier flash reading, as service sector growth continued to offset manufacturing weakness.

The IHS Markit eurozone composite purchasing managers' index edged up to 51.9 points in August from 51.5 points in July. The final August print also represented an improvement on the flash reading of 51.8 points.

In mainland Europe, the CAC 40 in Paris was up 1.1%, as was the DAX 30 in Frankfurt.

Stocks in the US are pointed to a buoyant open, with the Dow Jones and S&P 500 called up 0.8% and the Nasdaq up 1.1%.

In London, businesses exposed to Hong Kong were among the blue-chip gainers amid hopes of calm in the region in the wake of the extradition bill's withdrawal.

Financial services firm Prudential was up 4.2%, fashion house Burberry up 3.5% and lender Standard Chartered - which is one of the Hong Kong Special Administrative Region's three note-issuing banks - was up 3.5%.

At the bottom of the index was Barratt Developments, down 2.8% despite reporting a rise in annual profit, though noted political uncertainty.

Revenue for the year to June 30 fell 2.3% to GBP4.76 billion, but pretax profit rose 8.9% to GBP909.8 million as the firm's operating margin strengthened to 18.9% from 17.7%.

Barratt Chief Executive David Thomas called the year "outstanding" as the firm delivered both a strong operational and financial performance.

"Whilst there is increased economic and political uncertainty, we begin the new financial year with a strong forward order book, balance sheet and cash position which we believe provides us with the resilience and flexibility to react to potential changes in the operating environment in FY20 and beyond," said Thomas.

Despite rising in opening trade, Dunelm shares were down a sharp 9.6% at midday as curtains and bedding seller sounded caution on its outlook, due to Brexit uncertainty.

For its financial year ended June 29, the FTSE 250-listed firm posted a 4.8% rise in revenue to GBP1.10 billion from GBP1.05 billion the year before. On a like-for-like basis, sales rose 11%.

Pretax profit jumped 35% to GBP125.9 million from GBP93.1 million and on an underlying basis by 23% from GBP102.0 million.

"Recent trading performance has continued to be strong, reflecting both weak comparatives in the prior year and continued market share growth. However, we remain cautious about the full year outlook due to increased Brexit uncertainty and specifically the impact it may have on consumer spending as we enter our peak period," said Chief Executive Nick Wilkinson.

Avast was down 3.4% after a major shareholder sold off all of its remaining stake.

Sybil Holdings sold 120.9 million shares, or just over 12% of the cybersecurity company at a price of 367 pence per Avast share, giving a gross value of GBP443.7 million. Avast received no proceeds from the sale.

In March, Sybil sold 95.4 million Avast shares, worth 10% of the company, at 284p each, netting it GBP271 million at that time.

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