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(Alliance News) - European equities had a better day on Tuesday, with even a UK jobs data-boosted pound unable to prevent London's FTSE 100 notching a third successive close in the green.
The UK's flagship index undeperformed European peers on Tuesday, however, after bucking Monday's malaise and closing higher. Wider markets in London, meanwhile, received some impetus from M&A action.
The FTSE 100 closed up 53.55 points, 0.7%, at 7,518.35. The FTSE 250 ended up 141.48 points, 0.7%, at 20,065.59, and the AIM All-Share closed up 6.14 points, 0.6%, at 961.72.
The Cboe UK 100 ended up 0.8% at 749.15, the Cboe UK 250 rose 0.8% to 17,751.69, and the Cboe Small Companies also added 0.8%, closing at 14,777.11.
In European equities, the CAC 40 in Paris stock index ended up 1.3%, while the DAX 40 in Frankfurt jumped 1.6%.
Oanda analyst Craig Erlam commented: "Stock markets are in positive territory once more on Tuesday as investors continue to see value after a substantial sell-off in recent weeks. I'm not particularly convinced about the sustainability of such a move against the backdrop of high inflation, much higher interest rates and probable recessions but there's no doubting that the scale of the declines recently was bound to attract some back in.
"There's plenty of economic data and central bank speak to come this week that could easily make investors nervous once again but for now, there may be a belief that a lot of bad news is priced in. "
London's blue-chip index, stacked with international earners, rose despite the pound rallying on Tuesday.
The pound was quoted at USD1.2465 late Tuesday, up markedly from USD1.2250 at the London equities close on Monday. The pound reached an intraday high of USD1.2498, its best level in roughly two weeks.
The pound was boosted by strong UK jobs data which has lifted expectations of more Bank of England rate hikes.
The three-month UK unemployment rate was estimated at 3.7% for May, 0.3 percentage point lower than the previous three-month period, and 0.2 percentage point below pre-coronavirus pandemic levels. The figure also beat market consensus forecasts, according to FXStreet, of 3.8%.
The euro was priced at USD1.0534 at the European equities close on Tuesday, up sharply against USD1.0402 at the same time on Monday. Against the yen, the dollar was trading at JPY129.29, firm from JPY129.10.
The euro got a boost from hawkish comments from a European Central Bank Governing Council member.
Bloomberg reported Klaas Knot, president of the Dutch central bank, became the first eurozone official to moot a possible 50 basis point interest rate hike.
Knot told Dutch television that although he prefers a 25bp rate hike at the moment, if conditions change, a 50bp lift-off cannot be ruled out.
At its last meeting in April, the Frankfurt-based central bank kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%.
"He is one of the most hawkish on the Governing Council and so his comments shouldn't be very surprising. That said, the FX market is using his comments as an excuse to take the euro higher," analysts at BBH Global Currency Strategy commented.
In London, Imperial Brands closed the best large-cap performer, rising 7.4%.
In the six months that ended March 31, the Bristol-based tobacco firm reported a 27% fall in operating profit to GBP1.20 billion from GBP1.64 billion a year before.
Imperial explained that operating profit in the recent year suffered from GBP201 million in charges for its exit from Russia, while the year before benefited from a GBP281 million gain from the sale of its cigar business.
Pretax profit sunk 39% to GBP1.26 billion from GBP2.06 billion, while net revenue fell 1.3% to GBP15.36 billion from GBP15.57 billion, which was blamed on lower excise duty in Europe.
Imperial Brands approved an interim dividend of 42.54 pence per share, a 1.0% increase from 42.12p a year ago.
TI Fluid was the worst mid-cap performer, slumping 15%. Revenue fell in the first quarter of 2022, reflecting the continued disruptions to its supply chain, the conflict in Ukraine, and Covid-19 lockdowns in China.
TI Fluid, which makes products including brake fluids and fuel tanks for cars and trucks, said revenue in the three months that ended March 31 fell 4.1% to EUR755.0 million from EUR787.0 million.
The company saw its steepest revenue decline in Latin America, where it dropped 19% against the previous year. The only revenue growth was in North America, where it grew 3.5% in the quarter against the prior year.
Elsewhere on the Main Market, Nanoco jumped 46% after the US Patent Trial & Appeal Board ruled in favour of the company's patent claims against Samsung Electronics.
The Manchester-based quantum dots manufacturer had brought 47 claims against Samsung for the wilful infringement of its intellectual property under five patents.
All claims have now been ruled in favour of Nanoco. The company added it expects Samsung to appeal the decision with a potential revised trial in the final quarter of the year.
Back among mid-caps, ContourGlobal jumped 33% to 257.00 pence after it agreed to a takeover by US private equity giant Kohlberg Kravis Roberts & Co.
New York-based KKR has offered 263.6p per share for ContourGlobal, valuing the London-based power generation firm at about GBP1.75 billion.
ContourGlobal's board have unanimously recommended the deal.
ContourGlobal's largest shareholder, Reservoir Capital, also has accepted the offer for its 71.4% stake. In total, KKR said it already has acceptances for the offer representing 72.8% of ContourGlobal shares.
"The board of ContourGlobal welcomes KKR's intention to provide capital and operational expertise to support ContourGlobal's strategy, including accelerating investments in the energy transition," he added.
Elsewhere in the M&A space, M&C Saatchi fell 2.1% to 159.60p.
The London-based advertising agency rejected a new proposal from AdvancedAdvT, led by one of M&C's own directors Vin Murria.
AdvancedAdvT made a new offer which values M&C shares at 207.5p. Under the terms of the offer, M&C shareholders would receive either 40p in cash plus 2.043 new AdvancedAdvT shares, or just 2.503 new AdvancedAdvT shares.
M&C said the offer is "derisory".
Stocks in the US were solidly higher at the time of the European equities close. The Dow Jones Industrial Average climbed 0.6%, the S&P 500 added 1.1% and the Nasdaq Composite rose 1.4%.
Brent oil was quoted at USD115.10 a barrel late Tuesday, significantly higher from USD112.19 late Monday. Gold stood at USD1,820.68 an ounce, up against USD1,812.63.
Wednesday's economic calendar has UK inflation data at 0700 BST, a eurozone inflation reading at 1000 BST and Japanese GDP numbers overnight.
The local corporate calendar has a trading statement from insurer Aviva, annual results from luxury retailer Burberry and interim numbers from pub operators Mitchells & Butlers and Marston's.
By Eric Cunha; ericcunha@alliancenews.com
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