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LONDON (Alliance News) - UK and European stocks are pushing higher Wednesday, with life insurers leading the UK gains in the absence of any significant data hurdles and amid improved investor sentiment after Tuesday's bumper reading of US investor sentiment.
There continues to be background concern over the Ukraine situation and Chinese growth - most recently highlighted by reports of a small bank run in the Jiangsu province of China. However, markets appear happy to leave these concerns on the back burner for now and focus more on the six-year high in US consumer confidence recorded on Tuesday.
By mid-morning Wednesday the FTSE 100 is up 0.5% at 6,639.22, the FTSE 250 is up 0.8% at 16,276.42, and the AIM All-Share is up 0.2% at 853.05.
European equity markets also appear to have been encouraged by comments from Bundesbank President Jens Weidmann Tuesday that he would be open to the introduction of quantitative easing by the European Central Bank. Weidmann has previously been vocal in opposing QE, so his comments have been taken as a big step towards the implementation of further policy easing. However, the consensus among analysts remains that asset purchases by the ECB, similar to those seen the US and UK, remain unlikely.
"Our firm conviction remains that QE is not coming, because we believe that the European recovery is on track, that the Eurozone will not slide into deflation, and that the environment for QE in Europe remains complicated, irrespective of Mr Weidmann's much-quoted remarks," said UBS economist Reinhard Cluse.
Major European equity markets continue higher, however, with the CAC 40 up 0.9% and the DAX up 1.2%.
A quiet morning for economic data has seen mixed readings within the European economy. German Gfk consumer confidence remained stable over the past month, with the reading for April coming in at 8.5, unchanged from March.
In Italy, retail sales remained flat month-on-month in January, disappointing economists who were expecting 0.4% growth in sales after they fell by 0.3% in December.
Italian consumer confidence in March has improved, however, recording 101.7, up from 97.7 in February and exceeding economists expectations of 98.4, perhaps suggesting a pick up in retail sales in the coming months.
The mixed data has caused the euro to slip slightly against the dollar, with the single currency currently trading at USD1.3800. Meanwhile, in the absence of any UK data Wednesday, the pound is near flat against the dollar, currently trading at USD1.6530.
Within UK equities, Life Insurance is the top gaining FTSE 350 sector, with Standard Life leading the sector and the FTSE 100 higher, up 6.1% after the announcement that it has bought Ignis Asset Management from Phoenix Group for GBP390 million in cash. Phoenix Group is also a big FTSE 250 gainer, up 4.2% on the back of its sale, which also sees the two companies agreeing to a long-term strategic asset management deal.
Also boosting the sector, Legal & General is up 3.3% after saying it has won a bulk annuity contract with ICI Pension Fund. The insurer said the deal is the largest ever bulk annuity contract arranged by a pension scheme in the UK and comes just after the UK budget annuity shake up that saw shares in annuity provides plummet last week.
SSE shares are up 1.9% after the electricity company announced a major asset-disposal plan, cost-cutting initiatives, and a freezing of UK household energy bills ahead of its full-year results next week. The group is targeting about GBP1 billion pounds of combined disposals and cost cutting.
Lloyds shares are down 3.8% after the treasury announced the placing of the second tranche of its holding in the part-nationalised bank. The government said 5.35 billion shares were placed at 75.5 pence each, raising GBP4.2 billion.
Enquest is the biggest faller in the FTSE 250, down 7.6% after it said its pretax profit fell in its full year 2013 despite an increase in revenues, as costs and expenses hit the oil and gas development company.
The main data event is still to come Wednesday, with the release of US durable goods orders at 1230 GMT. Economists expect expect the headline number to have risen by 1.0% over the month, reversing the 1.0% decline recorded in January. However, as Rabobank analyst Michael Every points out, durable goods orders is a real "data onion", that has have layers peeled away to get to the underlying message. Ex-transportation, the expectation is for a 0.3% rise, and capital goods orders excluding the defence sector and aircraft are seen up 0.5%.
The US Markit services PMI for March is also due at 1345 GMT. The expectation is for an expansion in activity to a reading of 54.2, from 53.3 in February.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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