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(Alliance News) - Stock prices were higher at midday on Friday buoyed by a positive statement by China on reaching a trade agreement with the US.
President Xi Jinping said Friday that China wants to reach an initial trade deal with the US but is "not afraid" to fight back when necessary and will enact economic reforms at its own pace.
It is rare for Xi to speak so directly about the trade war, and his comments come two days after US President Donald Trump complained that Beijing had not made sufficient concessions so far, making him reluctant to conclude a bargain.
"As we always said we don't want to start the trade war but we are not afraid," Xi told former US officials and other foreign dignitaries at a meeting at Beijing's Great Hall of the People.
"When necessary we will fight back, but we have been working actively to try not to have a trade war," he told the group, which included former US secretary of state Henry Kissinger, former US treasury secretary Henry Paulson and former Australian prime minister Kevin Rudd.
The UK large-cap FTSE 100 index was up 72.00 points, or 1.0%, at 7,310.43. The FTSE 250 was up 60.60 points, or 0.3%, at 20,430.46, and the AIM All-Share was up 2.93 points, or 0.3% at 905.14.
The Cboe UK 100 index was up 1.1% at 12,393.62. The Cboe UK 250 was up 0.4% at 18,340.07 and the Cboe UK Small Companies was up 0.1% at 11,281.71.
In Paris the CAC 40 was up 0.3%, while the DAX 30 in Frankfurt was 0.1% higher.
"Markets appear to have found some sense of positivity in a week that has seen its fair share of pessimism over the growing feeling the trade talks may have ground to a standstill. However, despite expectations that Trump will sign a pro-activist Hong Kong bill, we have heard from Xi Jinping overnight who stated that they still hope to put together a phase one deal. Ultimately, we will need to see a shift on the US side, with the removal of tariffs key to getting that deal across the line," said IG Group's Josh Mahony.
In the FTSE 100, Rightmove was up 1.9% after the property portal appointed Andrew Fisher as non-executive chair with effect from January 1. Rightmove said Fisher will succeed Scott Forbes, who retires on December 31 after more than 14 year as chair of the company.
At the other end of the large cap index, Johnson Matthey was the worst performer, down 2.8%, continuing Thursday's decline. On Thursday, the specialty chemical firm had said interim profit was hit by problems in its Clean Air division. The stock closed down 7.1% on Thursday.
Berkeley Group was down 1.5% after HSBC cut the housebuilder to Hold from Buy.
In the FTSE 250, Coats Group was the worst performer, down 7.5%.
The industrial thread manufacturer said challenging market conditions have led to slower sales performance. For the four months from July to October sales were flat at constant currencies, reflecting "slightly lower" activity in both Apparel & Footwear and Performance Material businesses, against the "strong growth" of 4% in the comparative period in 2018, Coats said.
On a reported basis, sales in the period were down 1% year-on-year, an improvement on the 3% decline in the first half. "This was largely due to the anticipated softening of the foreign exchange translation headwinds that we entered 2019 with," the company said.
The pound was quoted at USD1.2873 at midday, down from USD1.2915 at the London equities close on Thursday, following weak UK purchasing managers' index data.
The UK private sector in November recorded the sharpest drop in output since July 2016, IHS Markit said, with the general election looming - adding to an already uncertain outlook due to Brexit.
The flash composite output index read 48.5 in November, a 40-month low and down from October's final print of 50.0. The UK services business activity index also slumped to a 40-month low, coming in at 48.6, down from 50.0 in October.
The flash UK manufacturing purchasing managers' index came in at 48.3 in November, down from 49.6 in October and represented a two-month low, IHS noted. The November flash UK manufacturing output index read 48.3, also a two-month low and behind October's final reading of 49.6.
The 50.0 mark separates expansion from contraction, so Friday's data indicates the UK services and manufacturing industries both are in decline.
"Both these readings are clear disappointments and in coming in firmly below the 50 mark indicate both of these are in contractionary territory. Looking under the hood we can see further signs for concern, with drops in output and new orders and while this could be explained away due to the heightened political uncertainty ahead of next month's election, there is little doubting the fact that the UK economy has pretty much ground to a halt," said XTB analyst David Cheetham.
The euro stood at USD1.1053 at midday, down from USD1.1075 at the European equities close Thursday, after data showed the eurozone economy remained "close to stagnant" in November.
For November, the flash composite PMI reading fell to a three-month low, slipping to 50.3 from 50.6 in October. The flash services print was at a 10-month low, reading 51.5 compared to 52.2 the previous month, with the flash manufacturing PMI rising to 46.6, itself a three-month high, from 45.9.
The slight dip in the composite PMI was blamed on new orders falling for the third straight month.
The survey showed signs of the steep ongoing manufacturing decline spreading further to services, IHS said. Employment growth meanwhile slipped to the lowest for almost five years as firms took an increasingly cautious approach to hiring. Price pressures also cooled further, running at the lowest for over three years
November's flash PMI indicates the second-smallest eurozone expansion across services and manufacturing since 2013.
New European Central Bank President Christine Lagarde urged European countries to "innovate and invest" more to support growth at a time of global uncertainty, in her first major policy speech as head of the central bank.
The ECB's ultra-loose monetary policy would "achieve its goal faster and with fewer side effects" if euro area governments supported it with fiscal policy, Lagarde told a banking conference in Frankfurt.
The eurozone economy is expected to grow just 1.1% this year, she said, "much lower than previously forecast" as "trade tensions and geopolitical uncertainties" take their toll.
"Europe needs to innovate and invest to respond to these challenges and preserve its competitiveness in the longer run," said Lagarde, the former head of the International Monetary Fund.
The former head of the International Monetary Fund pledged to make her mark with a push for more action on climate change, gender equality and making the ECB's language more jargon-free. Lagarde added that she would launch "a strategic review" of the central bank's monetary policies.
Stocks in New York were set for a higher open on Friday following three straights days of losses. The DJIA was called up 0.1% and the S&P 500 index up 0.1%, while the Nasdaq Composite was called up 0.2%.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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