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(Alliance News) - European equity investors were in an upbeat mood generally Monday, though in London the FTSE 100 gave up all of its earlier gains by midday, succumbing to a stronger pound.
The FTSE 100 index was down 6.09 points, or 0.1%, at 5,913.49. The large-cap index had been 0.6% higher earlier in the session.
The mid-cap FTSE 250 index was up 38.33 points, or 0.2%, at 17,861.24 . The AIM All-Share index was up 0.67 of a point, or 0.1% at 38.33.
The Cboe UK 100 index was down 0.3% at 587.27. The Cboe 250 was up 0.3% at 15,077.00, and the Cboe Small Companies up 0.4% at 9,423.82.
On mainland Europe, the DAX 30 in Frankfurt was marginally higher.
The CAC 40 index was up 0.8% before trading on the Paris bourse was suspended due to a technical problem, operator Euronext said.
"We are working to resolve the problem," Euronext said in a tweet. It added that the problem affected all its market products.
"Volatility in stocks is low even though there are a few interesting news stories circulating. China’s economic announcements overnight raised a few eyebrows. In the third quarter, the economy grew by 4.9% on an annual basis, and that was a significant improvement on the 3.2% growth registered in the second quarter, but keep in mind that the consensus estimates were 5.2%. In September, retail sales and industrial production came in at 3.3% and 6.9% respectively – both showed increases on the previous updates as well as exceeding forecasts," CMC Markets analyst David Madden said.
"The proposed US coronavirus relief package remains in focus. Nancy Pelosi, of the Democrats, said that she is optimistic about a deal being struck before the US presidential election, but there was an acknowledgement that differences still exist. Some people are less convinced that an agreement can be reached as by tomorrow – the deadline that Pelosi set out. It would seem that traders are taking the view that where there is a will there is a way attitude as the political landscape isn't looking too great but US index futures are higher."
In the US, Wall Street was pointed higher. The Dow Jones Industrial Average was called up 0.7%. The S&P 500 was called up 0.8% and the tech-heavy Nasdaq Composite 1.0% higher.
The pound was quoted at USD1.2978 at at midday in London, up from USD1.2924 at the London equities close on Friday.
The pound was firm despite being the UK sovereign debt rating suffering a downgrade late Friday and a no-deal Brexit being very much in focus.
Moody's Investors Service on Friday downgraded the UK government's long-term issuer and senior unsecured ratings to Aa3 from Aa2, with its outlook changed to stable from negative.
"These types of events from credit rating agencies have lost their capacity to shock since the financial crisis, and now tend to get met with a collective shrug, simply because on balance they merely tend to state the obvious, and because everyone is in the same leaky boat," CMC Markets analyst Michael Hewson said.
"The agency said that they expected GDP to be 'meaningfully weaker' than originally envisaged due to a combination of the pandemic weighing on the services sector, as well as upcoming no deal Brexit concerns. Moody's also expressed concern about a 'weakening in the UK's institutions and governance' over the past few years."
Brexit negotiators David Frost and Michel Barnier are expected to speak on Monday after Michael Gove said the door was "ajar" for trade talks to resume.
The UK Cabinet Office minister said negotiations could go ahead if the EU changes its approach, despite Downing Street previously declaring discussions as "over".
EU negotiator Barnier was expecting to be called by his Downing Street counterpart on Monday afternoon, though No 10 was no more specific than saying the discussion would come early in the week.
Face-to-face talks were to take place in London between Gove and his opposite number on the UK-EU joint committee, Maros Sefcovic, in the morning.
"Sterling gains versus the euro and the dollar are particularly significant as it shows the markets are dismissing the British government's rhetoric that negotiations with the EU are over and the future trade relationship will be based on WTO terms as a bluff. If investors' stance in relation to sterling is anything to go by, then negotiations are far from over and the chances of a deal between the two parts being reached are reasonably high," ActivTrades Senior Analyst Ricardo Evangelista said.
The euro stood at USD1.1758 at the European equities close, up from USD1.1718 at the European equities close Friday.
Against the yen, the dollar was trading at JPY105.38, down a touch from JPY105.40 late Friday.
On the London Stock Exchange, boohoo shed 12%, the stock hit by a pair of media reports over the weekend.
Citing two people familiar with the matter, the Financial Times on Friday reported PwC has signalled its intention to quit as boohoo's auditor. In response, the fast fashion company said on Monday that PwC "remains its auditor at this time", but it has begun a tender for its replacement.
Separately, the Sunday Times reported the National Crime Agency is investigating companies that supply boohoo, over suspicions of money laundering and VAT fraud.
The UK agency is looking into the Leicester textile industry, with NCA officials saying they have evidence from whistleblowers in the city's garment factories, who provided documents that detail alleged money laundering and VAT fraud.
"As we have been highlighting since the story broke back in the summer of alleged suppliers paying well below minimum wage to its workers, we have suggested that this story will continue to run and run. We remain concerned about where this will all end up with NCA scrutiny, potential HMRC investigation and vocal MPs in Leicester, who are all now firmly interested in working practices and have Boohoo firmly in their line of sight," analysts at Shore Capital Markets said.
Among London large-caps, Rolls-Royce was the best performer, up 2.3%. The jet engine maker's shares had climbed 14% on Friday after Bloomberg reported Europe's top aviation regulator is satisfied that changes to the Boeing 737 MAX have made the aircraft safe enough to return to the skies before 2020.
Rolls-Royce supplies engines for the troubled aircraft.
At the other end of the large caps was St James's Place, down 1.8%, after Barclays cut the stock to Equalweight from Overweight.
In early company news, Land Securities rose after it unveiled a strategic plan which could see it exit "subscale sectors over time, where we have little or no competitive advantage".
Landsec was up 1.6% midday Monday. Landsec said Monday it will seek to "realise and recycle capital" from the sale of properties in hotels, leisure and retail parks, all three battered by Covid-19. A review has found that "certain elements of our portfolio are subscale", the developer and investor said.
On the whole however, Landsec painted an optimistic picture about its retail assets, despite its regional shopping centres being among the worst-hit by the pandemic.
Landsec also was bullish about the "quality of the central London portfolio", which accounts for 64% of its property assets by value.
Airline stocks were higher. British Airways-owner IAG climbed 0.9%, Ryanair was up 0.8%, and budget carrier easyJet rose 1.0%.
The new boss of British Airways has demanded that the self-isolation requirement for international arrivals is replaced by Covid-19 tests before departure.
Sean Doyle, who was appointed chief executive last week, told the Airlines 2050 summit of industry leaders that "we do not believe quarantine is the solution".
"It's our view that even if that quarantine period is reduced to seven days, people won't travel here and the UK will get left behind," Doyle said.
Transport Secretary Grant Shapps told the conference the UK government is developing a "test and release regime" which will still involve a quarantine period of at least a week.
He said: "My ministerial colleagues and I have agreed a regime, based on a single test provided by the private sector and at the cost to the passenger, after a period of self-isolation and doing those things could achieve our objectives.
In commodities, Brent changed hands at USD42.73 a barrel on Monday, down from USD43.00 at the London equities close on Friday.
An ounce of gold fetched USD1,913.62, up from USD1,900.51.
By Eric Cunha; ericcunha@alliancenews.com
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