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(Alliance News) - Stocks in London ended mixed on Thursday, with the FTSE 100 missing out on the global equity market rally amid strength in the pound, which appreciated as the prospect of a no-deal Brexit appeared less likely.
The FTSE 100 index closed down 40.09 points, or 0.6% at 7,271.17. The FTSE 250 ended up 30.45 points, or 0.2% at 19,649.56, and the AIM All-Share closed up 3.55 points, or 0.4% at 881.56.
The Cboe UK 100 ended down 0.6% at 12,320.96, the Cboe UK 250 closed up 0.3% at 17,515.99, and the Cboe Small Companies ended flat at 10,839.40.
"The FTSE 100 significantly underperformed its mainland European counterparts, as the pound gained ground across the board thanks to improved sentiment around Brexit. The bullish theme seen elsewhere comes off the back of an improved outlook for US-China talks, which are planned for October. However, we have seen this all before, so there is a strong chance that market scepticism kicks in to limit these gains," said IG Group's Josh Mahony.
In Paris the CAC 40 ended up 1.1%, while the DAX 30 in Frankfurt ended up 0.9%.
Stocks in New York were sharply higher at the London equities close after the US and China agreed to hold high-level trade talks in October.
The DJIA was up 1.7%, the S&P 500 index up 1.5% and the Nasdaq Composite up 1.9%.
Chinese Vice Premier Liu He spoke to US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone Thursday morning, the commerce ministry statement said, and agreed to "work together and take practical actions to create favourable conditions for consultations".
Spreadex analyst Connor Campbell said: "If one was feeling cynical, Thursday's rally could be used to illustrate investors' refusal to learn from their past mistakes, stung time and time again by a pair of superpowers who never manage to deliver on their trade talk promises (there are, of course, similarities there with the pound and Brexit). Nevertheless, the global indices were feeling giddy, giving way to a series of one month highs despite this being a very familiar part of the trade war market cycle."
On the economic front, private sector employment in the US increased more than forecast in August, figures from payroll processor ADP showed.
ADP said 195,000 jobs were added in August, beating forecasts for a reading of 149,000. July's reading was revised down to 142,000 from the initially reported 156,000 jobs.
The readings come ahead of the closely watched US nonfarm payroll report on Friday, which could give the most significant measure to date of the health of the economy.
The report is expected to show that the US has added 158,000 new jobs in August, in line with July's 164,000 jobs. The unemployment rate is expected to hold steady at 3.7%.
On the London Stock Exchange, Melrose Industries ended the best blue chip performer, up 8.0%.
The industrial turnaround specialist said its loss narrowed by almost two thirds in the first half of 2019 as revenue doubled, led by its acquisition of engineering firm GKN just over a year ago.
Melrose reported a GBP128 million pretax loss for the six months ended June 30, well below its GBP372 million loss the year before. Revenue for the period was twice what it had been, totalling GBP5.70 billion versus GBP2.85 billion.
In terms of outlook, Melrose is confident in meeting its annual expectations, although it will be challenged by tariffs and downturn in the automotive sector. The firm intending to improve business performance though investment, as well as better cash management and cost control - as well as increase accountability.
Melrose lifted its dividend 10% to 1.70p per share from 1.55p per share the year before.
At the other end of the large cap index, Mexican gold miner Fresnillo ended as the worst performer, down 5.4%, tracking spot gold prices lower, as the precious metal's price fell following the positive US labor data.
Gold was quoted at USD1,515.10 an ounce at the London equities close, down sharply USD1,546.70 late Wednesday.
In the FTSE 250, Future ended the best performer, up 9.2% after the magazine publisher said adjusted annual earnings will be "materially" ahead of current board expectations following stronger-than-expected trading in the final quarter.
Languishing at the other end of the midcap index, CYBG ended down 21% after the challenger bank on Wednesday warned of increased payment protection insurance costs.
Late Wednesday, CYBG said it expects to increase its legacy payment protection insurance costs for financial 2019 by between GBP300 million and GBP450 million.
CYBG, which operates the Clydesdale Bank and Yorkshire Bank brands and recently bought rival Virgin Money, said it saw a "significant spike" in payment protection insurance claims in the final days before the August 29 deadline. The bank said it received more than eight months' worth of information requests during August, as customers scrambled to file claims at the last minute.
The pound was quoted at USD1.2323 at the London equities close, higher than USD1.2193 at the close Wednesday, as prospects of a no-deal Brexit eased.
"The pound continued to find support from short-covering and bargain hunting as risks of a no-deal Brexit receded after MPs passed a bill designed to stop a no-deal Brexit last night, which is expected to pass through the Lords into law. The cable has broken above the high of the previous week USD1.2310, providing more reasons for the bears to rush for the exits," Forex.com analyst Fawad Razaqzada said.
UK Prime Minister Boris Johnson on Thursday called for an early election after a flurry of parliamentary votes tore up his hardline Brexit strategy and left him without a majority.
The government said it would make a second attempt on Monday to trigger the national polls after the opposition Labour party on Wednesday helped block Johnson's first bid.
"It is now time for the people to decide after parliament has failed them so we can resolve this once and for all," a Downing Street spokesman said.
The vote's timing is still being debated as the country hurtles toward an October 31, departure from the European Union without a plan for what comes next.
The prime minister was dealt a further personal blow when his brother Jo said he was quitting his junior ministerial role and not contesting his seat in parliament in the new ballot.
"One way or the other, the UK is heading for a new Brexit referendum. As Prime Minister Boris Johnson is now 43 seats short of a working majority in parliament, the UK will most likely hold a snap election ahead of Brexit. This vote would be a de facto 'Brexit referendum 2.0'. Alternatively, a new interim prime minister may call a formal Brexit referendum for early 2020 before holding elections thereafter. That Johnson could stay in office long enough to let Brexit happen before facing voters has become unlikely," analysts at Berenberg said.
The euro stood at USD1.1046 at the European equities close, up from USD1.1027 late Wednesday.
Brent oil was quoted at USD62.02 a barrel at the London equities close, up from USD60.50 at the close Wednesday.
"Brent crude rallied on the talk about the US and China continuing their trade discussions next month. The energy market is sensitive to the perceived health of the world economy, and should the trading relationship between the two largest economies improve, and that is likely to help the oil market," said CMC Markets analyst David Madden.
The economic events calendar on Friday has Germany industrial production data at 0700 BST, UK Halifax house prices at 0830 BST and eurozone GDP at 1000 BST. In addition, US Federal Reserve Chair Jerome Powell will speak on Economic Outlook and Monetary Policy at the University of Zurich in Zurich, Switzerland at 1730 BST.
The UK corporate calendar on Friday has annual results from emerging markets asset manager Ashmore Group and interim results from building products supplier SIG.
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