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LONDON (Alliance News) - London's major stock indices have rebounded Tuesday amid a global equities recovery, after Russian President Vladimir Putin raised hopes that the crisis in Ukraine won't result in war between the neighbours.
Stocks tumbled around the world Monday as investors sold riskier assets like stocks and bought traditional safe-havens such as gold and the US dollar, due to growing concerns over increasing political tensions in Ukraine.
However, "there has been a distinct change in the tone of the markets (Tuesday) as the Russian/Ukraine crisis stabilises," says Kathleen Brooks, research director at Forex.com.
Putin ordered the Russian military to end exercises near the border with Ukraine on time, his spokesman said. About 150,000 soldiers taking part in drills involving airplanes, tanks and ships will return to their bases on March 7, Russian Defence Minister Sergei Shoigu told the Interfax news agency.
Putin then said there was no need yet to send troops into Ukraine, but reserved the right to do so to protect Russians in the east of its neighbour. He denied that Russian troops were on the ground in Crimea, saying those surrounding Ukrainian army bases and installations on the peninsula were pre-Russian "self-defence" forces.
The FTSE 100 closed up 1.7% at 6,823.77, the FTSE 250 closed up 2% at 16,698.9, and the AIM All-Share index closed up 0.7% at 888.56.
Major European bourses also ended the day higher, with the CAC 40 in Paris and the DAX 30 in Frankfurt closing up 2.5%. When the London equity markets closed, the DJIA, S&P 500 and NASDAQ Composite were all up between 1.2% and 1.6%.
"This morning's events hardly give the impression we are out of the woods yet. Bulls may well have jumped the gun if today's move is assuming an all clear," CMC Markets senior trader Toby Morris cautioned.
The near 1% fall in the gold price from the four-month high it hit Monday weighed on gold mining stocks. Fresnillo, Randgold Resources and African Barrick Gold, which were some of the few gainers on Monday, ended the day amongst the biggest fallers in their respective indexes Tuesday, closing down 4.7%, 1.5%, and 3.2% respectively.
At the close of the London equity market, gold traded at USD1,337.66 per ounce.
Fresnillo was also hit after it reported that its pretax profit fell 65% in 2013, hit by explosion permit problems at mines in Mexico, lower metal prices, and a revaluation of the company's Silverstream asset.
Airline and travel companies International Consolidated Airlines Group, easyJet and TUI Travel rose as oil prices reversed with the easing tension. The heavy fuel consumers each closed up between 2.8% and 4%, having been big fallers on Monday.
Brent oil was trading at USD109.43 per barrel late Tuesday, having hit a high of USD112.36 Monday.
It was another busy day in the full-year earnings calendar, particularly for FTSE 250 stocks.
FTSE 100-listed Ashtead Group closed up 13% after the industrial equipment hire company posted a strong rise in pretax profit for its fiscal third quarter, driven by organic growth and acquisitions.
Perform Group, closing up 19%, was the biggest winner in the FTSE 250, after the digital media company outlined a new cost-savings plan as it saw pretax profit drop sharply, hit by acquisition costs and a higher cost base in what it called a "disappointing" 2013. Analysts predicted better things will come with the new restructuring phase.
Pace was another big riser, ending the day up 11%. The firm posted a pretax profit of USD130.8 million for 2013, up from USD80.1 million in the previous year, as revenue rose to USD2.47 billion from USD2.40 million and administrative costs declined. It posted a full-year dividend of 5.49 cents per share, up from 4.50 cents in the previous year, and said it expects its strong cash flow to continue in 2014.
Devro, on the other hand, was the index's biggest faller, closing down 9%. Although the sausage-casings manufacturer reported a marginal increase in revenues for 2013, it said its profits for the year were hit by slowing demand in some of its key markets, manufacturing issues in the US, and a sharp rise in raw material costs.
Several more companies warned of the hit they are facing from the recent rise in the value of sterling, although the pound was hit early in the trading session Tuesday after the UK construction PMI fell by more-than-expected in February. The figure dropped to 62.6, from 64.6 in January. While the reading continues to signal strong growth, economists had been expecting a more modest decline to 63.0.
At the time of the UK stock market close, sterling was trading at USD1.6662 and EUR1.2131.
In the data calendar Wednesday, the HSBC China services purchasing managers index for February is released by Markit Economics at 0145 GMT. Spanish services PMI is released at 0813 GMT, ahead of the Italian equivalent at 0843 GMT, France's at 0848 GMT, Germany's at 0853 GMT, the eurozone's at 0858 GMT, and the UK's reading at 0928 GMT. The second preliminary reading of fourth quarter GDP for the eurozone is released at 1000 GMT, at the same time as retail sales data for the single currency bloc.
In the afternoon, the US MBA mortgage applications reading for the week ended February 28 is scheduled for 1200 GMT. US ADP employment change data for February is released at 1315 GMT, before Markit releases US services PMI information at 1358 GMT. The ISM non-manufacturing index is released at 1550 GMT.
In the corporate calendar, FTSE 100-listed Standard Chartered, Admiral Group, Legal and General Group, Melrose Industries and FTSE 250-listed Dignity, BBA Aviation, Carillion, Michael Page International, SOCO International all release full-year results.
After Wednesday's equity market close, FTSE announces the results of its latest quarterly index review. Potential movers into the UK's blue-chip include St. James's Place and Barratt Developments, while Tate & Lyle looks set to be deleted for the twelfth time in 23 years. Meanwhile, Hochschild Mining has the potential to be reinstated to the FTSE 250, having been deleted in December.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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