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(Alliance News) - London stocks got into the festive spirit on Thursday, sentiment underpinned by some promising studies on the severity of the Omicron variant.
Travel stocks were amongst the top gainers on hopes the new strain will prove milder than previous variants.
The FTSE 100 index closed up 31.68 points, or 0.4%, at 7,373.34. The FTSE 250 ended up 185.96 points, or 0.8%, at 23,266.75, and the AIM All-Share closed up 11.07 points, or 0.9%, at 1,194.88.
The Cboe UK 100 ended up 0.8% at 732.37, the Cboe UK 250 closed up 1.0% at 20,687.41, and the Cboe Small Companies ended up 0.9% at 15144.60.
In European equities on Thursday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt ended up 1.0%.
European stocks extended recent gains on hopes over the severity of the Omicron variant.
Two new studies have suggested catching Omicron is less likely to result in severe symptoms and hospital admission than earlier Covid strains like Delta. But Neil Ferguson, from the Imperial College London team behind one of the studies, warned Omicron's severity may be offset by the "reduced efficacy" of vaccines to stop it being transmitted.
New research from Imperial College London has indicated that people with PCR-confirmed Omicron are 15% to 20% less likely to need admission to hospital, and 40% to 45% less likely to require a stay of one night or more.
Scientists in a separate Scotland-wide study called Early Pandemic Evaluation & Enhanced Surveillance of Covid-19 have said Omicron is associated with a two-thirds reduction in the risk of hospital admission compared with Delta.
"It might not be like some of the Santa rallies of years past, but at least markets have managed to claw their way higher this week," said Chris Beauchamp, chief market analyst at IG.
London saw broad-based gains, led by pandemic-hit stocks such as jet engine maker Rolls-Royce, closing up 2.1%, and British Airways parent International Consolidated Airlines, also up 2.1%.
Other airlines, such as easyJet, up 2.9%, rose despite Ryanair late Wednesday slashing guidance in the face of Omicron's spread. The Irish budget airline now expects a net loss for the financial year ending March 31 to be in the range of EUR250 million to EUR450 million, from a prior guidance range of EUR100 million to EUR200 million.
"Ryanair hopes to have more clarity, especially on the impact of Omicron on intra Europe travel restrictions, in time for its third quarter results on January 31," the airline said.
The warning was echoed by German national carrier Deutsche Lufthansa, which on Thursday said it will cut its winter flight plan by "around 10%" as the spread of the Omicron variant fuels uncertainty about travel. Nonetheless, the stock closed up 0.7% in Frankfurt.
Stocks in New York were in the green at the London equities close, with the DJIA up 0.6%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 0.8%.
"Markets are now firmly into the festive period, and traditionally this is a better one for stocks, even if it is low liquidity and lack of news that drives the move higher," said IG's Beauchamp. "2021 proved to be a solid one across the board for equities, even if the year didn’t match up to all the optimistic expectations prevailing in January."
Oil prices continued their recent recovery on Omicron optimism. Brent oil was quoted at USD76.22 a barrel at the London equities close Thursday, climbing from USD74.74 late Wednesday.
The dollar was mixed amid the risk-on mood. The pound was quoted at USD1.3402 at the London equities close Thursday, up compared to USD1.3346 at the close on Wednesday.
However, the euro stood at USD1.1310 at the European equities close Thursday, softening from USD1.1327 at the same time on Wednesday. Against the yen, the dollar was trading at JPY114.36, up compared to JPY114.22 late Wednesday.
Data on Thursday showed the number of US workers filing for first-time unemployment benefits remained unchanged as the jobs market continues to recover from the coronavirus pandemic. For the week that ended December 18, US initial jobless claims were 205,000, unchanged from the previous week's level. The figure was in line with the market forecast, cited by FXStreet.
Separately, the Department of Commerce said the US core personal consumption expenditures index rose 4.7% in November year-on-year, picking up pace from a 4.2% rise in October. The reading - which is the Federal Reserve's preferred gauge of inflation - topped consensus of 4.5% and remains well above the central bank's 2.0% target.
"Gold prices are holding up nicely despite another round of US data that mostly supported the case for the Fed to raise rates in March. Fed rate hike expectations have been constantly swinging over every data point and assessment over how omicron will delay parts of the economic recovery and potentially fuel more inflation," said Edward Moya, senior market analyst at Oanda.
Gold was quoted at USD1,807.10 an ounce at the London equities close Thursday, up against USD1,797.90 at the close on Wednesday.
Back in London, shares in Flutter rose 2.1% after agreeing to buy online gaming operator Sisal from CVC Capital Partners Fund for EUR1.91 billion, around GBP1.62 billion, in a bid to establish "a gold medal position" in the Italian market.
The Dublin-based gambling company, formerly known as Paddy Power Betfair, said the transaction is likely to complete during the second quarter of 2022. Flutter said the acquisition would give it an 20% share of Italy's online gambling market when combined with its PokerStars and Betfair brands.
Elsewhere, McBride ended up 5.9% to extend recent gains after on Wednesday saying banking partners have waived December 2021 covenant tests.
Libertine Holdings shares ended Thursday's session at 32.00 pence in its AIM debut, up 60% from its 20p IPO price. Libertine was founded in 2009 by Chief Executive Sam Cockerill while working at a UK biofuel producer. The company makes linear electrical machines for original equipment manufacturers of powertrains.
Friday's economic calendar has Japanese inflation overnight. The London Stock Exchange is open for a half-day on Friday, as are markets in France, while Germany and the US are shut entirely on Christmas Eve.
By Lucy Heming; lucyheming@alliancenews.com
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