(Alliance News) - Stocks in London were sharply higher at midday on Friday after the World Health Organisation alleviated fears over a spread of the coronavirus in China.
The WHO held off on declaring a global emergency saying it was "too early" to tell, despite confirmed cases in half a dozen other countries. China expanded its lockdown to cover an area with a total population greater than Canada's.
The WHO said China faced a national emergency but stopped short of making a declaration that would have prompted greater global cooperation, including possible trade and travel restrictions.
The outbreak emerged in late December in Wuhan, an industrial and transport hub of 11 million people in China's centre, spreading to several other countries including the US.
China is in the midst of its Lunar New Year holiday, a typically joyous time of family gatherings and public festivities. However, Beijing has canceled mass celebrations in a bid to control the spread of the deadly virus.
The FTSE 100 index was up 115.66 points, or 1.5%, at 7,623.33. The FTSE 250 was up 210.94 points, or 1.0%, at 21,751.50, and the AIM All-Share was up 0.2% at 965.59.
The Cboe UK 100 was up 1.5% at 12,910.04, the Cboe UK 250 was up 0.9% at 19,598.66, but the Cboe Small Companies was down 0.1% at 12,444.81.
In Paris the CAC 40 was up 1.2%, while the DAX 30 in Frankfurt was 1.4% higher.
"Stock markets in Europe have jumped this morning as the World Health Organisation said the coronavirus situation is not a 'global emergency' yet. The situation is getting worse in China as the number of confirmed infections and deaths has increased, but the fact the international health body said it is not yet a worldwide emergency, has lifted market confidence. Stocks declined recently for fear the situation would turn into a global crisis, but the update from the WHO has acted as a green light to the bulls," said CMC Markets analyst David Madden.
In the FTSE 100, Auto Trader was the best performer, up 4.2% at 600.00 pence. Morgan Stanley raised its price target on the digital car marketplace to 650p from 560p and reiterated its Overweight rating.
At the other end of the large cap index, NMC Health was the worst performer down 4.3% at 1,344.00 pence after a shareholder in the UAE-focused private healthcare firm offloaded a 1.0% stake.
Emirates NBD Bank sold around 2.2 million shares in NMC at a price of 1,250p each, in a deal worth GBP27 million. NMC received no proceeds from the sale.
Just Eat was down 2.7% after the UK Competition & Markets Authority waded into the online takeaway platform's merger with Dutch peer Takeaway.com.
Late on Thursday, the Dutch takeaway platform said the CMA was reconsidering its position on the merger. The CMA on Friday confirmed it will be looking into whether the combination would lessen competition in the UK takeaway platform sector. The invitation for comment closes on February 6.
In the FTSE 250, Finablr was the worst performer, down 24% after the payments and foreign exchange services provider said 392 million shares, or a 56% stake, has been pledged by BRS Investment Holdings as a security for borrowings raised by BRS Ventures & Holdings.
Finablr said the shares were used to refinance an acquisition facility borrowed by BRS Ventures & Holdings in connection with the acquisition of Travelex Holdings in January 2015.
Travel money provider Travelex was acquired by UAE businessman Bavaguthu Raghuram Shetty via BRS Ventures. Shetty is also founder of NMC Health.
The pound was quoted at USD1.3100 at midday, marginally lower from USD1.3107 at the London equities close on Thursday, after data showed the UK services sector returned to growth in January.
The seasonally adjusted IHS Markit/CIPS flash UK services purchasing managers' index posted 52.9 in January, up sharply from 50.0 in December and was the highest reading since September 2018.
Any reading below 50 indicates contraction, while one above expansion.
In addition, the flash UK manufacturing purchasing managers' index ticked up to 49.8 in January from 47.5 in December and was at its highest level since April.
The UK composite output index rose to 52.4 in January from 49.3 in December, climbing above the 50.0 no-change mark for the first time since August.
Analysts at Lloyds think the slew of positive UK PMI figures reduces the case for an interest rate cut from the Bank of England next Thursday.
Lloyds analyst Nikesh Sawjani said: "The big question is whether this is enough of a rebound to persuade the BoE to keep rates on hold at next week's meeting. Recent comments from a number of MPC members, including Governor Mark Carney, have hinted at the prospect of more members of the Bank's MPC joining the likes of Michael Saunders and Jonathan Haskel in voting for a near-term cut in interest rates, especially if the economy fails to show signs of a post-election bounce.
"In recent weeks, the probability that markets attached to a January rate cut from the BoE had risen to as high as 70%. However, following this morning's data that is now back at around 50%. On balance, we remain comfortable with our view that the Bank of England will keep interest rates on hold at this juncture particularly with full details of the proposed fiscal package in the Budget in March yet to be seen."
The euro stood at USD1.1037 at midday, flat from USD1.1036 late Thursday, after data showed eurozone business activity remained subdued at the start of the year, IHS Markit said.
The preliminary composite purchasing managers' index was unchanged at 50.9 in January, with the reading just above the no-change mark of 50, indicating a marginal expansion in activity.
The services activity index slipped to a two-month low of 52.2 in January from 52.8 in December.
However, the manufacturing PMI hit a nine-month high of 47.8 from 46.3, though with a reading below 50, the sector is still contracting.
Against the yen, the dollar was trading at JPY109.58, higher than JPY109.39 late Thursday.
Stocks in New York were set for a higher open
The DJIA was called up 0.2%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.
Ahead in the US earnings calendar, credit card company American Express will report fourth-quarter earnings before market open in New York.
Brent oil was quoted at USD61.70 a barrel at midday, up from USD61.40 at the London equities close Thursday.
Gold was quoted at USD1,560.30 an ounce at midday, marginally lower than USD1,563.00 at the London equities close Thursday.
Financial markets in Hong Kong and China will be closed on Monday for Chinese new year.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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