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(Alliance News) -Â A holiday in the US ensured a slow start to the week for Europe, though the FTSE 100 was outperforming peers at midday on gains for supermarkets, lockdown reopening plays, and oil stocks.
The index of London blue-chips was up 19.47 points, or 0.3%, at 7,142.74 on Monday. The mid-cap FTSE 250 index was up 155.52 points, or 0.7%, at 22,902.51. The AIM All-Share index was down just 0.45 of a point at 1,265.48.
The Cboe UK 100 index was up 0.3% at 710.88. The Cboe 250 was up 0.8% at 20,620.08, and the Cboe Small Companies down 0.1% at 15,501.39.
"European indices have started the week on a somewhat indecisive footing, with overnight losses throughout Asia highlighting the lack of bullish follow through after Friday’s impressive non-farm payrolls figure," said Joshua Mahony, senior market analyst at IG.
In mainland Europe, the CAC 40 in Paris was flat while the DAX 30 in Frankfurt was 0.2% lower on Monday.
Also keeping stocks subdued at the start of the week was a holiday in the US on Monday, with Wall Street returning to the fray on Tuesday.
With volumes muted, even some bumper PMI readings were unable to give Europe a meaningful boost.
The UK service sector was stronger than expected in June even if the rate of growth eased off May's 24-year high, survey results showed.
The IHS Markit/Chartered Institute of Procurement & Supply UK services business activity index registered 62.4 points in June, down from 62.9 in May but still marking the second-highest reading since October 2013. The reading beat the flash figure of 61.7.
Any result over the no-change mark of 50.0 indicates growth - signalling the service sector remained in rude health in June even as the pace of expansion slowed somewhat from May.
Tempering enthusiasm over the strong headline reading for June, the hospitality and leisure sector widely reported capacity constraints and staff shortages, IHS Markit said. This was even as job creation was the strongest since 2014, as businesses raced to meet demand following lockdown easing.
The pound nudged higher after the data. Sterling was quoted at USD1.3848, higher than USD1.3791 at the London equities close on Friday.
The euro also rose amid general dollar weakness, trading at USD1.1854, up from USD1.1845 late Friday as Germany and Spain helped the eurozone's private sector grow at a faster pace than first estimated in June.
The IHS Markit composite output index rose to 59.5 points in June, from 57.1 in May. The June number also topped the flash estimate of 59.2 points.
Germany's composite score reached a 123-month-high, while Spain's surged to a 256-month best figure.
The Japanese yen also advanced against the dollar, with its own private sector stemming its decline in June. The dollar was quoted at JPY110.84, down from JPY111.31 on Friday at the London equities close.
The au Jibun Bank Japan Services purchasing managers index rose to 48.0 index points in June from 46.5 points in May, and above June's flash reading of 47.2 points, reflecting a softer reduction in business activity.
Oanda's Sophie Griffiths commented: "The FTSE is outperforming its European peers, boosted by the supermarkets after Morrisons accepted a bid from US fund Fortress, although other interested parties are still circling."
In the FTSE 100, J Sainsbury rose 2.0% and Tesco shares increased 1.7% - both in a positive read across as FTSE 250-listed Wm Morrison Supermarkets jumped 11% on takeover interest.
Morrisons on Saturday accepted a takeover offer from a consortium of investment groups following its rejection of a bid last month from CD&R.
Under the agreed GBP6.3 billion deal, a group of investors comprising Softbank Group Corp-owned Fortress, Canada Pension Plan Investment Board and Koch Real Estate Investments will pay 252 pence per share plus a 2p special dividend.
According to the announcement, the deal also includes GBP3.2 billion in debt, which makes the total operation worth GBP9.5 billion with debt recovery. In June, Morrisons rejected CD&R's 230p per share offer, worth just over GBP5.5 billion.
However, Apollo could be poised to enter the bidding fray, on Monday saying it is mulling making a possible offer for Morrisons, but is yet to make a formal approach.
"Under the UK market rules, potential bidders have until 17 July to make an approach. With at least two other parties interested, the chances of this turning into a bidding war have risen sharply," the Oanda analyst said.
Oil majors were another sector in the green on Monday as Brent prices traded at their best levels since late 2018.
Brent oil was quoted at USD76.35 a barrel at midday, up from USD75.97 late Friday - changing hands around its best levels since late 2018. BP shares rose 0.6% while Royal Dutch Shell 'A' and 'B' shares increased 0.7% and 1.0% respectively.
Gold also fared well on Monday, as the dollar weakened, quoted at USD1,791.73 an ounce from USD1,783.83 on Friday.
At the top of the FTSE 100 was International Consolidated Airlines, owner of flag carrier British Airways, rallying 4.3% as UK Prime Minister Boris Johnson prepares to lift England's coronavirus restrictions on July 19.
Johnson will tell people that it will be left to their judgment how to reduce the risk posed by the virus, rather than expecting the government to set out restrictions in law. The approach is expected to mean that from "freedom day" in a fortnight's time, face masks will no longer be required in many settings and social distancing restrictions will be removed in pubs and restaurants.
The prime minister, who will give further details at a press conference on Monday afternoon, said: "As we begin to learn to live with this virus, we must all continue to carefully manage the risks from Covid and exercise judgment when going about our lives."
Other travel and leisure stocks rose at midday, with pub operator JD Wetherspoon up 3.1%, Wagamama-owner Restaurant Group up 2.4%, and budget airline easyJet up 2.5%. Lockdown winners, such as food delivery platforms Just Eat Takeaway.com and Deliveroo, fell 1.5% and 2.1% respectively.
Elsewhere in London, GCP Student Living rose 10% after noting takeover interest late Friday from a consortium comprising Scape Living and iQSA Holdco, and is in talks with the duo.
The student accommodation investor said it has received a "series of non-binding proposals" for its shares. A deal would be funded by Scape Living and iQSA's respective primary shareholders - APG Asset Management and Blackstone Group International Partners. APG currently holds just over an 11% stake in GCP.
By Lucy Heming;Â lucyheming@alliancenews.com
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