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LONDON (Alliance News) - Share prices in London and the pound rose strongly on Tuesday, as Brexit concerns among investors appear to be receding, following a poll released earlier in the day suggesting that the 'Remain' campaign is building a more decisive lead ahead of the EU referendum.
A poll by ORB for the Daily Telegraph found 55% of respondents intend to vote to keep Britain in the European Union, against 42% in favour of leaving, ahead of the EU referendum scheduled for June 23.
The FTSE 100 finished up 1.4%, or 82.83 points, at 6,219.26. The FTSE 250 rose 0.6%, or 103.93 points, at 17,135.67, and the AIM All-Share added 0.3%, or 2.46 points, at 733.27.
"Polls, as we have learnt over the past few years, must always be taken with a pinch of salt, but when a staunchly Eurosceptic paper produces a poll that puts the 'Remain' camp well ahead, markets listen," said IG analyst Chris Beauchamp.
The pound also rose against the euro and the dollar on the back of the poll projections. Sterling was quoted at USD1,4615 at the London equities close, having stood at USD1.4475 at the same time on Monday. Meanwhile, the pound was at EUR1.3108 at the close, compared to USD1.2929 on Monday.
Bank of England Governor Mark Carney, speaking at the UK parliament's Treasury Select Committee, said it is the central bank's responsibility to warn Britons about the risks that would arise if people vote to leave EU.
Carney told the Treasury Select Committee it was his job to "come straight with the British people" over the risks posed by a potential Brexit, as he defended the central bank against accusations its was peddling anti-Brexit rhetoric. Carney had warned earlier in May that the "Brexit" would spark a technical recession.
The UK currency also reacted positively to data from the Office for National Statistics showing that the UK budget deficit narrowed by less than expected in April. Public sector net borrowing excluding public sector banks decreased GBP0.3 billion from last year to GBP7.2 billion in April. It was forecast to fall to GBP6.4 billion.
The weakness in the euro reflected ZEW data showing that the ZEW Indicator of Economic Sentiment for Germany dropped to 6.4 from 11.2 in April. Economists had forecast a score of 12. The index declined for the first time since February, as financial experts do not expect the strong performance of the economy in the first quarter to continue.
The euro fell against the dollar, quoted at USD1.1147 at the close Tuesday against USD1.1203 on Monday.
A report from Destatis revealed that the German economy expanded at the fastest pace in two years in the first quarter. Gross domestic product climbed 0.7% sequentially, faster than the 0.3% rise seen in the fourth quarter. GDP climbed 1.3% on a yearly basis, weaker than the 2.1% expansion seen in the previous quarter.
On a calendar-adjusted basis, GDP growth improved to 1.6% year-on-year from 1.3%. The readings all confirmed the GDP growth figures released on May 13.
The DAX 30 index in Frankfurt ended up 2.2%, while the CAC 40 in Paris added 2.5%.
In New York at the London close, the Dow 30 index was up 1.1%, the S&P 500 up 1.2% and the Nasdaq Composite was up 1.6%.
The US Commerce Department said new home sales surged up by 16.6% to an annual rate of 619,000 in April from a revised 531,000 in March. Economists had expected new home sales to climb by 2.3% to a rate of 523,000 from the 511,000 originally reported for the previous month.
On the London Stock Exchange, Old Mutual rose 5.9% after the Anglo-South African financial services company said it has received interest from would-be buyers of its stake in OM Asset Management, the New York-listed boutique money manager. Old Mutual, which owns a 66% stake in OMAM, said it has received approaches from "third parties" to acquire its shareholding in the company.
"There can be no certainty that these approaches will lead to any transaction or any certainty as to the terms on which any such transaction might proceed," Old Mutual said in a statement.
Imperial Brands rose 3.0%, after Barclays upgraded the tobacco company to Overweight from Equal Weight.
Severn Trent was another gainer, ending up 2.4%. The water and wastewater firm reported better-than-expected results, with its pretax profit more than doubled and its earnings beating consensus figures as the company demonstrated it has made a good start to the current regulatory period and provided positive guidance.
However, it was not all good news for shareholders as the dividend for the year was cut by 5.0%, but that was expected and in line with guidance.
Kingfisher added 3.1% after the DIY retailer beat analyst expectations when it reported growth in sales in the first quarter of its financial year as it makes progress with its five-year plan to try and boost trading.
It reported growth in sales in the three months to April 30 of 5.1% to GBP2.72 billion on the same period the year before, beating Cantor Fitzgerald's forecast of 4.6% growth to GBP2.71 billion. Like-for-like sales growth of 3.6% at constant currencies also beat Davy Group's estimate of 2.3% and the consensus forecast of 2.4%.
Gold was quoted at USD1,230.78 an ounce at the close Tuesday, compared to USD1,248.30 at the same time Monday.
Meanwhile, crude prices rose marginally, with Brent oil standing at USD48.75 a barrel at the close Tuesday, against USD48.28 a barrel at the close Monday. Investors will keep an eye on the US API weekly crude oil stock data, due at 2130 BST.
Also among a handful of blue-chip decliners, Coca-Cola HBC fell 3.0% to 1,324.00 pence. Credit Suisse said it placed 5.4 million shares in the London-listed bottler on behalf of private equity vehicle New Argen Holdings. Following the placing, the vehicle continues to hold 4.5 million shares in the bottler, representing 1.2% of its issued share capital. The place at GBP13.15 per share raised GBP71 million.
In the FTSE 250, Homeserve ended as the best mid-cap performer, up 7.1%. The home insurance and repairs company said it is excited about the prospects for its US business, which helped to drive the group's full-year profit higher.
Halfords Group added 3.2%, following the acquisition of online bikes and accessories retailers Tredz and Wheelies Direct for GBP18.4 million. Tredz specialises in the sale of premium bikes and cycling parts, accessories and clothing, while Wheelies provides bicycle replacements for insurance companies. Both companies are based in South Wales.
Big Yellow rose 2.3% after the self-storage provider highlighted its expansion plans within the capital and south east, and hiked its full-year dividend after having seen strong revenue growth in its financial year.
Meanwhile, AVEVA Group ended among the biggest decliners in the mid-cap index, down 4.6%. The engineering software company said its pretax profit fell in the financial year to the end of March due to one-off costs, while revenue also declined amid tough end-market conditions.
In the UK corporate calendar Wednesday, Marks & Spencer Group, Mediclinic International, Babcock International Group, Wizz Air Holdings and Pennon Group release full-year results. Zoopla Property Group and Shaftesbury publish half-year results, while Intertek Group, Dixons Carphone, Paysafe Group and HSS Hire Group all issue trading statements.
In the economic calendar, Germany's Gfk consumer confidence survey is due at 0700 BST, while IFO business climate data are due at 0900 BST.
In the US, the goods trade balance is due at 1330 BST, while the US housing price index is due at 1400 BST. Martkit's services and composite Purchasing Manager's Index readings are due at 1445 BST, while the EIA crude oil stocks data are due at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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