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(Alliance News) - The FTSE 100's outperformance continued into a second session on Tuesday, buoyed by oil majors, while equities in mainland Europe were weighed down by worries over further Covid lockdowns.
The FTSE 100 index closed up 11.23 points, or 0.2%, at 7,266.69. The FTSE 250 ended down 208.09 points, or 0.9%, at 23,221.61, and the AIM All-Share closed down 13.42 points, or 1.1%, at, 1,206.81.
The Cboe UK 100 ended up 0.2% at 721.03, the Cboe UK 250 closed down 0.6% at 20,739.19, and the Cboe Small Companies ended down 0.4% at 15,281.85.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.9% and the DAX 40 in Frankfurt shed 1.1%.
"Europe has recovered much of its earlier losses after trading deep in negative territory shortly after the open but most of the region remains in the red. The PMIs gave some cause for encouragement...The coming months will be very challenging though, especially as a number of countries are now facing the prospect of more severe restrictions," said Craig Erlam, senior market analyst at IG.
Stocks in mainland Europe extended losses on fears that further Covid-19 restrictions on the continent are imminent, sparked by Austria's return to lockdown this week.
Austria closed shops, restaurants and festive markets on Monday, the most drastic restrictions seen in Western Europe for months.
Chancellor Angela Merkel has warned that Germany is not doing enough to curb its "highly dramatic" fourth wave of the pandemic. With intensive care beds swiftly filling up and its weekly incidence rate at an all-time high of 399.8 new infections per 100,000 people, Germany's worst-hit regions have ordered new shutdowns, including the closure of Christmas markets.
The US State Department has urged Americans not to travel to Germany and neighbouring Denmark because of surging Covid cases.
The euro was treading water at the European equities close on Tuesday, worries over further Covid lockdowns balanced out by some strong economic survey data.
IHS Markit's flash composite purchasing managers' index for the eurozone improved to 55.8 points in November from 54.2 in October. Any figure above 50.0 denotes growth. IHS Markit noted October's reading was a six-month low, but November saw a rise for the first time in four months.
The November reading had been expected to edge down to 53.2, according to FXStreet.
The euro stood at USD1.1262 late Tuesday, flat against USD1.1263 at the same time on Monday.
The pound was quoted at USD1.3363 at the London equities close Tuesday, down from USD1.3412 at the close on Monday after IHS Markit data showed the UK composite PMI for November inched lower to 57.7 points from October's final reading of 57.8.
IHS Markit said UK firms experienced "another month of rapid input cost inflation".
"The latest increase in average cost burdens was the fastest since this index began in January 1998, driven by higher wages and a spike in prices paid for fuel, energy and raw materials," IHS Markit added.
The US composite PMI for November also edged lower, to 56.5 in November from 57.6 in October. This was driven by the service sector, which saw its PMI hit a two-month low of 57.0.
Growth in the manufacturing sector hit a two-month high, meanwhile, at 59.1 in November from 58.2 in October. However, both sectors recorded marked upturns in work backlogs amid supply chain delays and staff shortages. Compounding this, the rate of input price inflation reached a a new series high.
The Japanese yen and precious metal gold took a beating as the dollar strengthened.
Gold was quoted at USD1,784.01 an ounce at the London equities close Tuesday against USD1,818.94 at the close on Monday. Against the yen, the dollar rose to JPY114.96 from JPY114.74 late Monday.
Stocks in New York were mostly lower at the London equities close, with the DJIA up 0.1% but the S&P 500 index down 0.3% and the Nasdaq Composite down 1.1%.
US President Joe Biden announced Tuesday that he has ordered the release of 50 million barrels of oil from the US strategic reserves in a coordinated attempt with other countries to tamp down soaring fuel prices.
"This release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the UK," the White House said.
The US reserves, held in underground depots in Texas and Louisiana, are the largest emergency supply of oil in the world.
However, oil prices jumped in response. Brent oil was quoted at USD81.49 a barrel at the London equities close Tuesday from USD79.86 late Monday.
The decision "has seen prices rise, as oil traders cover shorts, amidst an expectation that OPEC+ might delay or reduce their December output hike in response", said Michael Hewson, chief market analyst at CMC Markets.
"A bit of a crude awakening so to speak, with BP and Shell both pushing higher," he added.
Shares in Royal Dutch Shell closed up 1.4% for both its 'A' and 'B' class, while BP gained 1.5%.
Also bolstering the FTSE 100 index was contract caterer Compass, which climbed 5.6%. The company said it booked record new business wins and client retention in financial 2021 but still saw revenue drop in the year as a whole.
Compass, which was badly hurt by pandemic-related restrictions on activity, noted its underlying revenue recovered to 88% of 2019 revenue by the fourth quarter. Full-year underlying revenue was 77% of financial 2019's as economic reopenings boosted trading.
Compass reinstated its dividend, declaring an annual payout of 14 pence per share.
CRH rose 3.5% after the building materials firm said it expects 2021 profit to be "well ahead" of the year before, after a strong rise in sales and earnings in the first nine months.
The Dublin-based company said it expects to book full-year earnings before interest, tax, depreciation and amortisation in excess of USD5.25 billion, which would be up 14% from USD4.6 billion in 2020.
In the mid-cap FTSE 250 index, Telecom Plus rallied 16% on an upbeat outlook despite a dip in interim profit.
Pretax profit in the six months to September 30 came in at GBP19.9 million, slipping 7.4% from GBP21.5 million a year ago. However, the firm said recent trading has set new records. The rising costs of living is driving increasing numbers of new partners to join the company, it said, adding that this is an encouraging lead-indicator for future growth.
Pets at Home added 5.5% after the pet products seller nearly doubled pretax profit to GBP70.6 million in the 28 weeks to October 7 from GBP38.9 million a year before.
The Cheshire, England-based pet supplies retailer is guiding for annual underlying pretax profit to be at the top end of the current range of analyst expectations of GBP128 million to GBP135 million. Underlying pretax profit was GBP87.5 million in financial 2021.
Sinking to the bottom of the index was AO World, tumbling 14%. The online electricals retailer said logistics problems and a more competitive German market put pressure on its interim performance and led to it sinking to a loss.
AO posted a pretax loss of GBP10.4 million in the six months to end-September, swinging from a profit of GBP17.7 million a year ago. The poor performance came on the back of a hefty rise in costs and expenses.
Looking ahead, AO said: "As we now look to the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our newer products where we have less scale, experience and leverage. In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties."
Diploma ended down 8.7%, reversing Monday's 8.0% rise. The seal and cables maker on Monday reiterated its full-year guidance for next year after posting a strong annual profit rise driven by organic growth initiatives and better demand.
River & Mercantile rose 8.8% after two London-listed peers confirmed making takeover approaches for the asset manager. Premier Miton Group and AssetCo both confirmed they initiated discussions with River & Mercantile, but both said any offer was conditional on River & Mercantile completing the planned sale of its Solutions business to Schroders.
Late last month, River & Mercantile and Schroders said Schroders agreed to buy the business for GBP230 million. The Solutions arm is also known as the UK Advisory, Fiduciary Management & Derivatives business. It had GBP42 billion in assets under management as of September 30.
The UK corporate calendar for Wednesday has half-year results from water firm United Utilities and specialty chemicals firm Johnson Matthey. Full-year results are due from lender Virgin Money UK and soft drinks maker Britvic.
Wednesday's economic calendar has the German Ifo business climate indicator at 0900 GMT and US durable goods orders and gross domestic product at 1330 GMT. At 1900 GMT are the latest Federal Reserve minutes.
US initial jobless claims, usually out on Thursdays, are due at 1330 GMT on Wednesday with US markets shut on Thursday for Thanksgiving.
By Lucy Heming; lucyheming@alliancenews.com
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