LONDON (Alliance News) - UK stocks were largely higher midday Monday, led by mining stocks after Glencore took substantial steps to improve its financial position, while the US stock market will be closed for Labor Day.
The FTSE 100 index traded up 0.5% at 6,071.40, the FTSE 250 was up 0.1% at 16,829.42 while the AIM-All Share was down 0.2% at 731.91.
European stocks also were posting gains. The CAC 40 index in Paris was up 0.5% and the DAX 30 in Frankfurt was up 0.7%.
Glencore shares rose 5.1% after the multi-commodity miner and trader outlined plans to improve its financial position, including a USD2.5 billion capital raising plan and multiple capital preservation and debt reduction measures it will take, include suspension of dividends, worth up to a combined USD10.2 billion in cost savings.
The company, which is the worst performing stock in the FTSE 100 this year, said the USD2.5 billion fully-committed equity issue will be used to cut its debt pile and to increase its financial strength. It is 78% underwritten by Citigroup and Morgan Stanley an includes commitments from the group's chief executive, chief financial officer and several other board members, who will cover the remaining 22% of the issue.
"Given how crowded this short trade has been, it is not surprising to see such a bounce in the shares, but it will be interesting to see whether this is more than just a flash in the pan," said IG's Senior Market Analyst Chris Beauchamp.
Fellow miner Antofagasta traded up 6.8%, while the FTSE 350 Mining sector index was the best performing sector index, up 1.6%.
CMC Markets analyst Jasper Lawler said miners are also being boosted by a bounce in copper prices.
"A two percent bounce in the price of copper on Monday improves the chance the metal has formed an interim base after hitting fresh six-year lows two weeks ago," Lawler said.
Elsewhere in the FTSE 100, Associated British Foods was the one of the worst performers, down 1.8% after the company confirmed it will take a hit to its full-year profit because of adverse currency effects.
The consumer goods company, which owns discount fashion retailer Primark and British Sugar, said its expectations remain unchanged for a decline in adjusted operating profit in its current financial year. It said that a rise in operating profit at constant currency in grocery, agriculture, ingredients and retail will be offset by a decline in the sugar business, which along with changes in foreign exchange rates will lead to an overall fall in adjusted operating profit for the full year.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, commented that "while valuation concerns remain near-term, expansion for Primark still heads the positives for investors longer term. On balance, and despite the early negative share price reaction, analyst consensus opinion continues to point towards a Buy."
Primark is set to open its first US store on Thursday in Boston.
In the FTSE 250, Redefine International was down 1.9%. The real estate investors said it has reached a conditional deal to acquire the AUK Portfolio from Aegon UK Property Fund for GBP437.2 million.
It said it will acquire the portfolio through its Redefine AUK subsidiary. The portfolio includes 19 properties in the UK, mostly in London and the South East, valued at a total of GBP439.9 million, with six single-let and the rest multi-let. In addition, Redefine said it has struck a GBP52.5 million deal to acquire Banbury Cross Retail Park in Oxfordshire.
Nigeria and West Africa-focused oil and gas company Lekoil said it has started oil production from the Otakikpo Marginal Field in the OML 11 licence in the Niger Delta. The first oil flowed from the well on Friday, with production testing then carried out over the weekend.
The Otakikpo-002 well produced from only the first of four planned production strings, and flowed oil at various choke sizes for over 24 hours at a peak rate of 5,703 barrels of oil per day, Lekoil said, significant ahead of its expectations. The company's shares were up 13%.
The Shanghai stock market returned to trade Monday after a four-day weekend, and closed down 2.5%, having opened higher.
People's Bank of China Governor Zhou Xiaochuan told a meeting of G-20 finance ministers and central bank governors in Turkey that China's stock market has almost completed its correction and that there's no basis for long-term depreciation" of the Chinese currency.
The participants in the meeting of G20 finance ministers and central bank governors in Ankara on Saturday said, "we are confident the global economic recovery will gain speed. We will continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability."
While avoiding a direct reference to China, the statement said the group would refrain from competitive devaluations, and resist all forms of protectionism.
Separately, the China Securities Regulatory Commission said late on Sunday that China's markets were more stable and risks and bubbles in the stock markets have been unwound to a considerable extent following a period of high volatility.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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