(Alliance News) - Stocks got a boost on Wednesday as China appeared to soften its trade stance towards the US, while the London Stock Exchange Group added more juice to the FTSE 100 after getting a surprise takeover approach from Hong Kong.
The UK blue-chip index was 68.86 points, or 1.0%, higher at 7,336.81 Wednesday midday. The FTSE 250 was up 281.72 points, or 1.4%, at 20,020.93, while the AIM All-Share was up 0.6% at 880.19.
The Cboe UK 100 index was up 1.0% at 12442.59. The Cboe UK 250 was up 1.6% at 17890.16, and the Cboe UK Small Companies was up 0.3% at 10891.34.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.5% and 0.8% respectively in early afternoon trade.
On Wall Street, stocks are pointed to a broadly higher open, with the Dow Jones called up 0.1% and the S&P 500 and Nasdaq Composite both seen flat.
Investor sentiment was lifted on Wednesday after China announced it would exempt 16 categories of US products from tariffs, ahead of a fresh round of trade talks next month.
The exemptions announced Wednesday will become effective on September 17 and be valid for one year, according to the Customs Tariff Commission of the State Council, which released two lists that include seafood products and anti-cancer drugs.
The lists mark the first time Beijing has announced products to be excluded from tariffs. Wednesday's lists, however, do not include big-ticket items such as soybeans and pork.
"The move is a step in the right direction for US-China trade relations, and it might trigger a similar move from Washington DC. The decision by China bodes well for the trade talks that are due to take place between the two sides next month," commented David Madden at CMC Markets.
The London Stock Exchange Group was up 4.5% after receiving a cash-and-shares takeover bid from Hong Kong Exchanges & Clearing.
HKEX has offered 2,045 pence in cash and 2.495 new HKEX shares for each LSEG share, valuing LSEG at 8,361p per share and GBP29.6 billion in total. It gives an enterprise value, which includes debt, of GBP31.6 billion.
This price, HKEX said, is a 23% premium to LSEG's 6,804.00p closing price in London on Tuesday.
With LSEG shares trading at 7,112.00 pence at midday, well below the offer price, there seems to be doubt that a deal will happen.
HKEX Chief Executive Charles Li commented: "Bringing HKEX and LSEG together will redefine global capital markets for decades to come. Both businesses have great brands, financial strength and proven growth track records."
In response to the offer, LSEG said the proposal was "unsolicited, preliminary, and highly conditional", but it will look into it and make a further announcement "in due course".
Richard Hunter, head of markets at Interactive Investor, commented: "The proposed offer would be totemic in terms of East-West relations and the complementary strengths of the two exchanges would make strategic sense. This is an initial shot, however. As such, and not surprisingly, it will throw out a number of questions rather than answers at this stage."
"The proposal is a fascinating prospect, but far from a done deal. The fact that the LSE share price has already retreated from the initial 10% spike on release of the news may reflect some initial scepticism around the likelihood of the deal going through," he added.
In the FTSE 250, Galliford Try was 3.4% higher despite sharply cutting its dividend.
The construction and house-building company reported revenue, which includes share of joint ventures, of GBP2.86 billion for the year to June 30, 8.6% lower compared to GBP3.13 billion a year earlier. Revenue, excluding joint ventures, was down 7.5% to GBP2.71 billion from GBP2.93 billion.
As a result, pretax profit declined 27% to GBP104.7 million from GBP143.7 million year-on-year.
The FTSE 250-listed company reduced its annual payout to 58.0 pence a share from 77.0p paid the year before.
On Tuesday, Galliford Try proposed the sale of its housebuilding businesses, Linden Homes and Partnerships & Regeneration, to Bovis Homes Group. The company believes that the sale will help remainder of Galliford to become a "well-capitalised standalone construction-focused group". The potential deal would value the two housebuilding businesses at GBP1.08 billion.
Linden Homes delivered steady sales and strong margins in tougher conditions, Galliford noted on Wednesday, while Partnerships & Regeneration delivered "impressive" growth and increased profitability.
Shares in Bovis Homes were up 3.0%.
Sports Direct International was up 2.3% as it hosts its annual general meeting on Wednesday. If an auditor is not appointed at the AGM, the firm will have to ask the government to find one instead.
This comes after Sports Direct in August confirmed that Grant Thornton did not intend to seek reappointment as auditor at the company's AGM.
Asking the government to appoint an auditor "would really sting given the additional damage to the firm's reputation and because Ashley hardly strikes you as someone who would relish surrendering control in this way," said Russ Mould, investment director at AJ Bell.
Shares in shopping centre owner Capital & Regional rose 9.8% after Johannesburg-listed Growthpoint Properties said it is mulling taking a majority stake in the firm.
In addition, Capital & Regional reported a pretax loss of GBP55.4 million for the six months to the end of June, compared to a profit of GBP6.7 million the year before.
Net asset value as at June 30 was down 23% at 55 pence from 66p the same date the prior year, as Capital & Regional's portfolio value fell by 6.8% to GBP797.3 million from GBP855.2 million the prior year.
In the UK, the government said it would appeal a Scottish appeal court ruling that Prime Minister Boris Johnson's decision to suspend parliament for five weeks was "unlawful".
Scotland's appeal court on Wednesday ruled Johnson's decision to suspend Parliament was "unlawful". Johnson's advice to the Queen that Parliament be prorogued from this week until October 14 "was unlawful because it had the purpose of stymying Parliament", a summary of the judgement said.
The pound was quoted at USD1.2358 at midday, firm versus USD1.2350 late Tuesday.
London Midday is available to subscribers as an email newsletter. Contact info@alliancenews.com
