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(Alliance News) -Â London stocks climbed higher on Wednesday as the week's rally extended into a third session, with travel stocks once again the top performers as border restrictions are relaxed around Europe.
The FTSE 100 index was up 81.59 points, or 1.3%, at 6,301.73 Wednesday midday. The mid-cap FTSE 250 index was up 324.87 points, or 1.9%, at 17,761.18. The AIM All-Share index was up 0.2% at 893.85.
The Cboe UK 100 index was up 1.3% at 10,654.40. The Cboe 250 was up 2.1% at 15,259.50, and the Cboe UK Small Companies up 0.5% at 9,527.80.
In mainland Europe, the CAC 40 in Paris was up 2.0% while the DAX 30 in Frankfurt rallied 2.4%.
"Stocks opened higher not only in Europe but almost everywhere around the globe as investors’ risk appetite continues to grow in the middle of the week. The rally sparked by traders who first bet on a quick recovery is now gaining momentum," said Pierre Veyret, technical analyst at ActivTrades.
"More and more investors are joining the buy side, trying to catch the train while they still can, boosted by growing stability for businesses and national economies now dealing with a less uncertain environment," said Veyret.
Once again in London, travel stocks were among the top performers. Blue-chips International Consolidated Airlines and easyJet were up 8.8% and 5.2%, respectively, while mid-cap TUI rose 8.8%. Rolls-Royce, which sells jet engines to the aviation industry, was up 7.8%.
Travel stocks have been boosted in recent weeks on hopes that as countries across Europe begin to ease lockdown rules, tourist demand will bounce back for the key summer holiday season.
Italy on Wednesday reopened its borders to visitors from the rest of the EU and dropped a ban on travel between its regions.
The relaxation of novel coronavirus containment measures came amid a steady drop in infection numbers and pressure to reopen the economy after strict lockdown measures. Italy went into national lockdown on March 10. Restrictions have been eased gradually starting from early May, but safety precautions including social distancing still apply.
Visitors from non-EU countries that are part of the Schengen zone, such as Switzerland and Norway, as well as the UK, can also freely travel to Italy as of Wednesday.
Meanwhile, the German government has approved the lifting of travel warnings for 29 European countries, to take effect on June 15.
The warnings - imposed worldwide in March due to the coronavirus outbreak - are set to be lifted for Germany's 26 fellow EU member states apart from Spain where restrictions on visitors will extend beyond June 15. Britain and three non-EU members of the borderless Schengen zone - Iceland, Switzerland and Liechtenstein - also will see the German warnings lifted, according to a document approved at a cabinet meeting in Berlin on Wednesday.
Like Spain, Norway - the fourth non-EU Schengen member - has restrictions on arrivals in place beyond June 15, so is not included.
Ryanair shares were up 2.6% despite the budget airline on Wednesday reporting practically no passenger traffic at all in May, saying it expects little to change in June.
The carrier said traffic in May dropped by 99.5% to just 70,000 passengers versus the 14.1 million passengers it carried a year earlier, as Covid-19 airspace closures continue to ground flights.
Ryanair said it operated just 701 scheduled flights in May, including a number of rescue and medical flights on behalf of various EU governments, versus its budgeted schedule of 70,000 flights.
Going forward, Ryanair expects minimal traffic in June, due to multiple EU government flight bans and restrictions remaining in place.
Alongside the lifting of lockdowns, survey data from IHS Markit showed the eurozone services sector improved in May, though still in severe contraction.
The IHS Markit eurozone composite output index read 31.9 points in May, its best level in three months. It was higher than the flash reading of 30.5 and up on April's 13.6 and March's 29.7.
However, the purchasing managers' index remained well below the 50.0 no-change mark.
The four largest euro area economies registered slower – albeit still severe – contractions in activity. Italy was the best-performing, followed by Germany and France. Spain remained the weakest-performing nation.
The eurozone services business activity index rose markedly from April's record low of 12.0 to record a three-month high of 30.5.
The UK's private sector also saw improved conditions in May from April's record lows, but likewise continued to struggle.
The composite PMI for May rose sharply to 30.0 points from a score of 12.9 in April.
The services PMI rose to 29.0 in May from 13.4 in April, due to rising client demand as the UK economy started to reopen, especially in the construction sector. The UK manufacturing sector fared better, as the PMI score for May rose to 40.7 from 32.6 in April.
Sterling was quoted at USD1.2591 after the data, higher than USD1.2535 at the London equities close on Tuesday. The euro remained broadly flat, trading at USD1.1209 on Wednesday against USD1.1210 late Tuesday.
The safe-haven yen eased back on Wednesday. Against the yen, the dollar was quoted at JPY108.73, up from JPY108.55 on Tuesday.
Fellow safe-haven gold was priced at USD1,718.30 an ounce at midday, down from USD1,738.21 late on Tuesday. Brent oil was flat at USD39.10 a barrel versus USD39.20.
The fall in gold resulted in share price declines for precious metals miners in London. Polymetal International was down 5.6% and Fresnillo down 3.2%.
In the FTSE 250, Chemring shares surged 26% after posting an interim performance ahead of expectations.
The Romsey, Hampshire-based company reported 37% revenue growth in the six months to the end of April to GBP191.0 million from GBP139.3 million a year before, taking pretax profit up to GBP19.0 million from GBP4.3 million.
Chemring increased its interim payout by 8% to 1.3 pence a share.
Looking forward, the defence technology firm said all of its businesses have remained open despite the challenges presented by Covid-19. Its full-year expectations are unchanged, with about 95% of expected second-half revenue in the order book or delivered to date.
To come in the economic calendar on Wednesday is US ADP employment at 1315 BST followed by US PMIs, from IHS Markit and the ISM, at 1445 BST and 1500 BST respectively. There is an interest-rate decision from the Bank of Canada at 1500 BST.
By Lucy Heming;Â lucyheming@alliancenews.com
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