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(Alliance News) - European equities opened higher on Wednesday, as beaten down stocks enjoyed somewhat of a bounce after heavy selling on Tuesday.
UK politics and Prime Minister Boris Johnson remain in focus, as a fresh crisis and a pair of key resignations leave his future in peril.
The FTSE 100 index was up 166.38 points, or 2.4%, at 7,191.85. The FTSE 250 index was up 338.85 points, or 1.9%, at 18,654.16. The AIM All-Share index was up 6.04 points, or 0.7%, at 873.50.
The Cboe UK 100 index jumped 2.5% to 717.55. The Cboe 250 was up 1.8% at 16,177.12, while the Cboe Small Companies was 0.2% higher at 13,135.89.
In mainland Europe, the CAC 40 stock index in Paris was up 2.2%, while the DAX 40 in Frankfurt was up 1.8%.
"The UK's premier index staged a rebound in early exchanges, with gains broadly based and with the more beaten down stocks enjoying some relief. This comes after a punishing session yesterday which wiped almost 3% from the index as energy stocks felt the full force of the selling pressure," Interactive Investor analyst Richard Hunter commented.
"UK markets will be in general focus today as the latest round of political drama unfolds, with sterling likely to feel the most heat."
The pound was quoted at USD1.1974 early Wednesday, up from USD1.1900 at the London equities closed on Tuesday, but remaining below the USD1.20 level.
Embattled UK PM Johnson has been left trying to save his premiership after a pair of cabinet resignations and a series of government exits threatened to force him from Number 10.
Rishi Sunak quit as chancellor on Tuesday, alongside Sajid Javid who resigned as health secretary, in a move that came just as the prime minister was being forced into a humiliating apology to address the row over scandal-hit former deputy chief whip Chris Pincher.
The pair were swiftly replaced on Tuesday night, with Nadhim Zahawi promoted to be the new Chancellor and Steve Barclay becoming Health Secretary.
Sunak and Javid, both potential leadership rivals, offered sharp criticisms of Johnson in their resignation letters.
While political uncertainty has hit the pound, broader dollar strength has also been a headwind for sterling.
"Recessionary fears have pushed the dollar to the highest levels since 2002. Crucially, the pricing of the Fed tightening cycle is withstanding recession fears more robustly than those in the likes of Europe. For today, expect the dollar to consolidate near the highs in advance of tonight's release of FOMC minutes," analysts at ING commented.
The latest US Federal Reserve meeting minutes are released at 1900 BST.
The dollar gave back some gains early Wednesday, though the euro remained below the USD1.03 mark - levels which, up until Tuesday, it had not traded at since 2002.
The euro stood at USD1.0261 early Wednesday London time, up from USD1.0240 at the European equities close on Tuesday. Against the yen, the dollar was trading at JPY135.52, down from JPY135.90.
In Asia on Wednesday, the Nikkei 225 closed 1.2% lower. In China, the Shanghai Composite shed 1.4%, while the Hang Seng in Hong Kong fell 1.5%. The S&P/ASX 200 in Sydney ended 0.5% lower.
In London, abrdn shares added 6.7%, the best large cap performer. It unveiled a GBP300 million share buyback, with a first GBP150 million phase being conducted by with Goldman Sachs.
Just Eat Takeaway shot up 16% as Amazon has taken up a 2% stake in its Grubhub unit - which was recently put up for sale.
The takeaway delivery company said that from Wednesday, US Amazon Prime members can sign up for a free year of Grubhub membership, allowing them unlimited free delivery fees from "hundreds of thousands of restaurants".
"The agreement is expected to expand membership to Grubhub+, while having a neutral impact on Grubhub's 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards," Just Eat said.
Amazon will take a 2% Grubhub stake and also receive warrants allowing it to lift its holding by a further 13%, subject to performance conditions being met.
"The company, together with its advisors, continues to actively explore the partial or full sale of Grubhub," Just Eat said.
Just Eat Takeaway in April had said it was exploring a partial or full sale of Grubhub, which it had agreed to purchase for USD7.3 billion in June 2020. The deal was completed a year later.
Trainline jumped 22%, the standout mid-cap performer. It has seen a "faster than anticipated recovery in rail passenger volume across Europe".
The rail and coach ticketing platform said net ticket sales in the four months to June 30 were up 16% from pre-Covid times.
"This performance reflects a faster than anticipated recovery in rail passenger volume across Europe - including a notable resurgence of inbound customers from the US - as well as the benefit of Trainline increasing its investment in its International business," Trainline explained.
Trainline now expects net ticket sales growth between 18% and 27% versus pre-Covid levels. It expects revenue to be 22% and 31% above pre-virus levels.
It had previously expected net ticket sales in a GBP3.8 billion to GBP4.2 billion range, between 2.0% and 13% above the pre-Covid figure. Revenue was expected to land between GBP280 million and GBP300 million, which would have been between 7.3% and 15% above pre-virus levels.
discoverIE was up 6.1%, also among the best mid-cap performers. Shore lifted the customised electronics make to 'buy' from 'hold'.
Gold stood at USD1,769.90 an ounce, up from USD1,767.88. Brent oil was quoted at USD105.07 a barrel, down a touch from USD105.18.
Still to come on the economic events calendar on Wednesday, alongside the Fed minutes, is a US services PMI at 1445 BST.
By Eric Cunha; ericcunha@alliancenews.com
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