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(Alliance News) - Stocks in London were mostly lower on Monday, though the FTSE 100 was in the green as investors looked ahead to the UK budget statement later in the week, which Chancellor Jeremy Hunt promised to be "rabbit-free".
The FTSE 100 index opened up 50.14 points, 0.7%, at 7,368.18.
However, the mid-cap FTSE 250 was down 33.86 points, or 0.2%, at 19,582.35, and the AIM All-Share was down 1.80 points, 0.2%, at 853.04.
The Cboe UK 100 was up 0.5% at 736.31. The Cboe UK 250 down 0.3% at 16,884.29. The Cboe Small Companies was up 0.4% at 12.957.88.
UK government ministers said they are determined to crack down on an "outrageous" waste of public money, while seeking billions in tax hikes and savings, as the chancellor warned he will be playing Scrooge at the upcoming autumn budget.
Hunt has promised a "rabbit-free" statement, with a focus on delivering "certainty" to families and businesses in the wake of the market turmoil sparked by his predecessor's GBP45 billion tax-cutting bonanza.
He is thought to be considering a range of options to address a so-called black hole in the public finances, including an extended freeze on income tax and national insurance thresholds.
The autumn statement will be announced on Thursday.
Analysts at ING said: "The UK chancellor, Jeremy Hunt, has been ramping up the rhetoric that Thursday's autumn statement is going to hurt - comprising tax rises for all and a large cut in government spending. None of the choices are politically palatable, but failure to deliver would trigger another round of Gilt and sterling sales."
The pound rose to USD1.1803 on Monday morning in London, from USD1.1781 late Friday. Against the yen, the dollar was quoted at JPY139.53, up from JPY139.07.
The euro traded at USD1.0333, up slightly from USD1.0326. A week ago, the single currency was still trading below parity with the dollar.
"The severity of the EURUSD correction has caught out many (including ourselves)...Even the European Central Bank's Luis De Guindos said on Friday that he felt markets had overreacted to the US CPI data. The very difficult question is whether this short EURUSD squeeze has run its course near 1.0365 or needs to trade higher still," ING analysts added.
US inflation cooled by more than expected in October. The consumer price index rose 7.7% last month against the prior year, according to figures released on Thursday last week, slowing from the 8.2% rise recorded in September. Market consensus had expected inflation to slow by less than that, to 8.0% in October.
Stocks on the continent were higher. The CAC 40 index in Paris was up 0.4%, while the DAX 40 in Frankfurt was 0.5% higher.
In Asia, stocks were in the mixed. The Shanghai Composite in China closed 0.1% lower, while the Hang Seng in Hong Kong closed up 1.7%. In Tokyo, the Nikkei 225 closed down 1.1%, while the S&P/ASX 200 in Sydney closed down 0.2%.
US President Joe Biden on Sunday said he will seek to establish "red lines" in America's fraught relations with Beijing when he holds high-stakes talks with Chinese counterpart Xi Jinping.
Biden said he goes into Monday's encounter on the sidelines of a G20 summit in Indonesia stronger after his Democratic Party's unexpected success in midterm elections they were forecast to lose heavily.
Washington and Beijing are at loggerheads over issues ranging from trade to human rights in China's Xinjiang region and the status of the self-ruled island of Taiwan. Biden said he expected candid talks with Xi.
"Any signs of a further deterioration in the relationship is likely to rattle markets and investors will be clinging onto hopes that there could be communication re-boot," said Susannah Streeter, analyst at Hargreaves Lansdown.
In London, Informa led the FTSE 100, rising 6.4% in early morning trade as it upgraded its full-year outlook on the back of strong underlying revenue growth in the first 10 months of the year.
The business publisher and events organiser reported underlying revenue growth of 41% in its continuing business in the 10-months to October, thanks to strong trading in all three of its Business-to-Business Markets businesses and in its Academic Market business.
Informa said 2022 performance is tracking toward 85% of equivalent full-year revenue in 2019, when excluding China, which has been hurt by Covid-19 restrictions.
AstraZeneca was up 1.6% as it gained recommendation for marketing authorisation in the EU for three of its cancer treatments, Enhertu, Imfinzi and Lynparza.
Enhertu won recommended approval in the treatment of gastric cancer in those who have received a prior regimen of trastuzumab, another cancer drug. Imfinzi gained recommendation for approval in biliary tract cancer when in combination with chemotherapy, and Lynparza for prostate cancer.
Aveva was up 0.3%. The industrial software firm said that the Schneider Electric has the support of 4.1% of its shareholders, representing 10% of all shares not already held by Schneider.
On Friday, the two companies announced they had agreed an increase and final cash offer for Schneider's takeover of Aveva, of which it already owns a 59% stake.
Schneider offered 3,225 pence in cash for each Aveva share, which valued Aviva equity at GBP9.86 billion, and implied an enterprise value of GBP10.57 billion. The offer was around 4% higher than that agreed a couple of months ago.
In the FTSE 250, Ferrexpo was down 6.6% after Credit Suisse cut the Ukraine iron ore exporter to 'neutral' from 'outperform'.
Kainos was up 1.9% as Chief Executive Brendan Mooney boasted that demand for the firm's services has "never been higher" amid a rise in interim profit and revenue.
In the six months ended September 30, Kainos posted revenue totalling GBP179.8 million, up 26% against the GBP142.3 million achieved the year prior. Pretax profit rose 11% to GBP27.5 million from GBP24.8 million.
In the small-caps, ME Group jumped 3.6%. The instant-service equipment firm said that its first half performance was ahead of its expectations, noting higher consumer demand for all its services and a strong recovery across continental Europe.
As a result, ME Group lifted its full-year outlook once again. Revenue is now expected between GBP256 million and GBP262 million. Previously, the company expected revenue at GBP257 million.
Gold fell to USD1,761.45 an ounce early Monday from USD1,763.60 late Friday. Brent oil fetched USD95.95 a barrel, down slightly from USD96.32.
Still to come on Monday, there is an EU industrial production print at 1000 GMT.
By Heather Rydings; heatherrydings@alliancenews.com
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