Johnson Matthey Share News (JMAT)

LONDON (Alliance News) - UK and European stocks were rebounding Wednesday from their heavy falls on Tuesday, with the FTSE 100 reclaiming the 6,000 point mark, as investors shrugged off weaker-than-expected purchasing managers index data from China and the eurozone.

At midday, the FTSE 100 index traded up 1.4% at 6,019.88 points. On Tuesday the blue-chip index closed down 2.8% at 5,935.84 points. The midcap FTSE 250 index was up 0.4% at 16,598.13, and the AIM All-Share traded up 0.1% at 730.87.

In Europe, the CAC 40 in Paris was up 0.7%, and the DAX 30 in Frankfurt was up 0.7% as well. Shares in Volkswagen were finally getting some respite, rising 3.0%, having lost 31% in the past two days on a US investigation into the installation of software on its diesel cars that cheats emissions tests.

Carsten Menke, commodities research analyst at Julius Baer, said that the Volkswagen news hurt the platinum market on Tuesday, due to fears that German car manufacturer’s diesel disaster could weigh on demand for automotive catalysts.

"Around 40% of platinum demand comes from automotive catalysts, which are mainly used for diesel-fuelled cars," Menke said but added that the Volkswagen scandal is unlikely to have a major negative impact on consumer preferences in Europe, but should curb market share growth in the US, where the diesel market share is less than 5%, compared to the more than 50% share in Europe.

"Hence, yesterday’s market reaction was most likely overdone," the analyst added.

The news had hit platinum group metals company Johnson Matthey on Tuesday, causing its share price to decline 8.1%. The company was one of the worst performers in the FTSE 100 again early Wednesday but recovered to be up 1.0% at midday.

In the US, futures point to a higher open on Wall Street. The Dow 30 and Nasdaq 100 were both indicated up 0.2% and the S&P 500 was up 0.1%.

The rise in futures and stock prices comes despite Chinese manufacturing data showing activity contracted by the most in six-and-a-half years in September, as orders and production declined at faster rates.

The flash manufacturing PMI fell to 47.0 in September from 47.3 in August, survey data from Caixin Insight Group and Markit showed Wednesday. This was the lowest score in 78 months and was below the consensus estimate of 47.5. A reading below 50 indicates contraction by the sector.

Meanwhile, data from Markit showed that the flash Eurozone services PMI declined to 54.0 in September from 54.4 in the prior month, coming in below the expected score of 54.2. The manufacturing PMI fell to 52.0, in line with forecast, from 52.3 in August. The composite output index fell to 53.9 from 54.3 in August. It was expected to fall to 54.0.

Separate data showed that Germany's private sector growth slowed slightly in September, with the manufacturing PMI score sliding to 52.5 from 53.3 a month ago. It was expected to fall to 52.6. The services Purchasing Managers' Index fell to 54.3 in September from 54.9 in August, while the composite output index fell to 54.3 in September from 55.00 in August.

Elsewhere on the London Stock Market, Smiths Group was up 2.2% and amongst the biggest FTSE 100 gainers. The engineering company said an improvement in margins helped its profit to edge higher in the year to the end of July, despite revenue falling, though it said its results for the current financial year will be more second-half weighed than normal.

The company, which has operations spanning energy services, medical devices and security sensors, said its pretax profit for the year was up to GBP459.0 million from GBP445.0 million a year earlier. The increase in profit was driven by a better operating margin in the year, up to 17.6% from 17.1%, which offset a 2% decline in revenue to GBP2.90 billion from GBP2.95 billion.

In the FTSE 250, Premier Oil traded up 4.5% after it said production is currently running above its full-year guidance, as it continues to focus on lowering costs and using its substantial hedging programme to battle the downturn in oil prices.

The oil and gas producer said production since the start of 2015 has averaged 57,100 barrels of oil equivalent per day after the company completed its summer maintenance activities. In terms of sales, Premier has hedged around 60% of its production in the second half of 2015 at USD92 per barrel and 30% of its production in 2016 at USD68 per barrel. Both those prices compare favourably to current Brent prices, which was trading at USD49.17 per barrel midday Wednesday.

Aircraft services company BBA Aviation confirmed it has agreed a USD2.07 billion deal to acquire US rival Landmark Aviation and will launch a big rights issue of shares to fund the deal.

The FTSE 250-listed group said the deal will be funded by existing debt facilities and by raising around GBP748.0 million via a fully-underwritten rights issue, which will see it issue 562.3 million shares at 133.0 pence per share. BBA shares closed at 284.7 pence on Tuesday, meaning the rights issues comes at a significant discount. The stock was down 1.0% at 282.00p Wednesday.

Hague and London Oil was the best performer in the AIM All-Share index, with its share price more than doubling on the news that it entered a conditional deal to buy a stake in the Duyung production sharing contract in Indonesia.

The oil and gas company said the contract includes the undeveloped Mako natural gas discovery and nearby infrastructure, with an initial estimate of gas in place of 902 billion cubic feet gross. The deal will expand Hague's southeast Asia portfolio, in line with its strategy, and it will take an 85% working interest in the contract at a relatively low risk, the company said. Hague added the project has healthy economics even within the current low commodity price environment.

Formation Group traded up 13% after the property development and project management company said its results for the year to the end of August will come in ahead of its expectations. Formation said its pretax profit for the year to the end of August will be more than double the GBP1.8 million target it had in place at the start of the year. This compares to a GBP99,000 loss it made a year earlier, and the company expects its profitability will continue to improve in the current financial year.

Still ahead in the economic calendar at 1400 BST, European Central Bank President Mario Draghi will be speaking to the European Parliament at the quarterly hearing before the Committee on Economic and Monetary Affairs.

Connor Campbell, financial analyst at Spreadex, said investors will be on the lookout for his comments on China, any mention of Volkswagen and, perhaps most importantly, a hint of some extra quantitative easing stimulus in the coming months.

Elsewhere, there is the Markit manufacturing PMI for the US at 1445 BST, while US Energy Information Administration crude oil stocks are at 1530 BST. Atlanta Federal Reserve President Dennis Lockhart is expected to speak at 1730 BST before the Columbus Rotary Club in the state of Georgia.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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