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Alliance News) - London's blue-chip index was outperforming European counterparts slightly on Monday, as the continent grapples with a new wave of tightened Covid restrictions.
Meanwhile, the mid-cap index was being held back by Hochschild Mining, whose shares collapsed as its licences face regulatory scrutiny in Peru.
"A relatively cautious tone was evident across financial markets at the start of the new week," analysts at Lloyds said.
"Rising Covid cases and the reintroduction of restrictions, alongside the prospect of the US Fed tapering its asset purchases at a faster rate than signalled previously, continued to place a cap on overall market sentiment."
The index was up 22.33 points, or 0.3%, at 7,246.73 early Monday. The mid-cap FTSE 250 index was up 47.47 points, or 0.2%, at 23,539.69. The AIM All-Share index was down 1.15 points, or 0.1%, at 1,230.99.
The Cboe UK 100 index was up 0.2% at 717.68. The Cboe 250 was up 0.1% at 20,962.92, and the Cboe Small Companies was down 0.2% at 15,359.79.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1% early Monday.
Ahead of the Christmas holidays, Austria shut its shops, restaurants and festive markets Monday, returning to lockdown in the most dramatic Covid-19 restriction seen in Western Europe for months.
The decision has prompted a fierce backlash, with tens of thousands taking to the streets, some blaming the government for not doing more to avert the latest coronavirus wave crashing into Europe.
As they wake up Monday morning, Austria's 8.9 million people will not be allowed to leave home except to go to work, shop for essentials and exercise. The Alpine nation also is imposing a sweeping vaccine mandate from February 1 – joining the Vatican as the only places in Europe with such a requirement.
Battling a resurgent pandemic almost two years since Covid-19 first emerged, several countries on the continent have reintroduced curbs, often choosing to ban unvaccinated people from venues such as restaurants and bars.
But not since jabs became widely available has a EU country had to re-enter a nationwide lockdown. Austria's decision punctures earlier promises that tough virus restrictions would be a thing of the past.
The euro traded at USD1.1270 early Monday, down sharply on USD1.1320 late Friday.
Sterling was quoted at USD1.3423 early Monday, lower than USD1.3460 at the London equities close on Friday.
Over the weekend, Bank of England Governor Andrew Bailey continued to reiterate that the risks to the UK economy were "two-sided" with slowing growth and rising inflation.
Commerzbank's Ulrich Leuchtmann said: "Do you remember that only a short while ago Andrew Bailey, governor of the Bank of England, had sounded so extremely hawkish that the market had priced in a BoE rate step for the beginning of November as an almost certain event?
"As we all know that did not happen; the BoE did not hike its key rate. That was damaging for sterling. Because there was a small but not impossible likelihood that we would not see a rapid BoE lift-off - the first rate hike. But mainly because the inability of Bailey and his colleagues to give clear signals to the market is negative for sterling. So really more a sterling-negative factor of the second degree, if you like."
Against the yen, the dollar rose to JPY114.14 versus JPY113.86.
In London, BHP opened 1.3% higher after it finalised the merger of its oil and gas arm with Sydney-listed Woodside. The all-stock merger will see Woodside shareholders have 52% of the new company and BHP shareholders 48%.
Completion of the deal is targeted in the second quarter of 2022. The combined entity will be the largest energy company listed on the ASX exchange in Sydney, Woodside said.
In addition, the Scarborough liquefied natural gas project Pluto Train 2 developments were approved, Woodside said. In announcing a final investment decision, Woodside said USD12.0 billion will be spent on the projects.
Hochschild Mining shares dropped 58% early Monday in London.
The miner said it is aware of the Peruvian head of Cabinet potentially looking to close certain mining projects in southern Ayacucho, including the company's Pallancata and Inmaculada mines, due to "alleged environmental complaints".
"The company has not received any formal communication from the government regarding this matter," the miner said. It learnt through various media outlets of the minutes of the meeting, which say that a commission has been constituted to negotiate the closure of mines. The head of Cabinet subsequently indicated that approvals will no longer be granted for additional mining or exploration activities, Hochschild said.
"The company believes this conduct by the Peruvian head of Cabinet is not in accordance with Peruvian law and is wholly without merit," it said. "Accordingly, Hochschild will vigorously defend its position and take all action necessary to ensure that the rights of the company and its wholly-owned subsidiaries under Peruvian and international law are respected."
The miner said it "operates under the highest environmental standards and applies industry best practice".
"As such, Hochschild categorically rejects any inference with regard to environmental pollution. The company's sustainable operations are strictly regulated and supervised by several Peruvian regulatory bodies and our activities remain in compliance with their requirements," it added.
At the other end of the FTSE 250, seal and cables maker Diploma was up 6.1% after it recorded strong annual profit growth, driven, it said, by organic growth initiatives and better demand.
For the financial year that ended September 30, pretax profit jumped 45% to GBP96.6 million from GBP66.7 million the year before. Operating profit was up 49% to GBP104.3 million from GBP69.8 million.
Revenue increased 46% to GBP787.4 million from GBP538.4 million.
Chief Executive Johnny Thomson said: "We have delivered strong results, including underlying growth and margin well ahead of our financial model. We have made significant strategic progress, including a record year for acquisitions, as we continue to develop high-quality scalable businesses for organic growth."
Diploma declared an annual dividend of 42.6 pence, up 42% from 30.0p the year before.
"Despite market uncertainties, I remain confident in our ability to deliver attractive long-term growth at sustainably high margins," Thomson added.
Gold was quoted at USD1,846.90 an ounce early Monday, lower than USD1,859.72 on Friday. Brent oil was trading at USD79.18 a barrel, firm from USD79.05 late Friday.
The Shanghai Composite closed up 0.6% on Monday, while the Hang Seng index in Hong Kong ended down 0.4%. Tokyo's Nikkei 225 index closed 0.1% higher. The S&P/ASX 200 in Sydney lost 0.6%.
By Paul McGowan; paulmcgowan@alliancenews.com
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