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(Alliance News) - Stock prices in London closed higher on Thursday, the global investment mood lifted after China sought to reduce trade tensions with the US and a new coalition government was installed in Italy.
The FTSE 100 index closed 1.0% higher at 7,184.32. The mid-cap FTSE 250 index ended up 0.5% at 19,292.50, and the AIM All-Share index 0.2% higher at 870.38.
The Cboe UK 100 closed up 0.8% at 12,178.76, the Cboe UK 250 up 0.3% at 17,165.52, and the Cboe UK Small Companies down 0.1% at 10,851.05.
Sterling continued to weaken against the dollar, falling below USD1.22. The pound was quoted at USD1.2196 at the London equities close, down from USD1.2233 late Wednesday and USD1.2290 late Tuesday.
"Already inexplicably happy following some positive, if familiar and insubstantial, trade war chatter from both sides of the divide, the return of Giuseppe Conte as the head of a new Italian coalition gave the markets license for a big rebound on Thursday," SpreadEx Financial Analyst Connor Campbell said.
Conte - who has led a coalition government since last year - was granted a fresh mandate to form a government by Italian President Sergio Mattarella following a deal by hitherto bitter foes the anti-establishment Five Star Movement and the centre-left Democratic Party.
The match-up followed efforts by Five Star to stave off a snap election called by right-wing former governmental partner the League.
"Overjoyed at the (theoretical) removal of one major issue from the globe's rather unappealing macro-buffet, the FTSE MIB [in Milan] was understandably the hottest index, leaping almost 2% higher", Campbell added.
Elsewhere in mainland Europe, in Paris the CAC 40 equities index ended up 1.4% and the DAX 30 in Frankfurt up 1.1%.
The euro was quoted at USD1.1058 at the close on Thursday, down from USD1.1083 late Wednesday.
"The FTSE echoed the gains in the Eurozone, if not quite with the same level of giddy enthusiasm," Campbell added.
Tempering the excitement of London investors - if not UK politicians - was the ongoing fall-out from Wednesday's surprise move by Prime Minister Boris Johnson to suspend Parliament for a month shortly after it returns from the holiday next week. This was approved by Queen Elizabeth late Wednesday afternoon.
The bid by Johnson - installed by the ruling Conservative party as PM last month - is widely seen as a means to confound attempts to block the possibility of a disorderly exit from the bloc at the end of October.
Amid rising anger among opposition parties and Remain supporters about the move on Thursday, the leader of the Scottish Conservatives Ruth Davidson resigned "with a heavy heart" citing family reasons as well as the "conflict" she felt over the Brexit policy being pursued by the party.
Davidson - Scottish leader since 2011 - was widely seen as a key figure in the rebound in Conservative support in Scotland.
Meanwhile, a petition on the website of Parliament calling on Johnson not to suspend the legislative body had attracted nearly 1.5 million signatures in little over a day.
Amongst the blue-chip risers in a broadly higher market Thursday, engineering firm Smiths Group closed 5.0% higher at 1,637 pence after Goldman Sachs boosted its rating on the stock to Buy from Neutral and hiked its price target to 1,850p from 1,650p prior.
Meanwhile, at the bottom of the FTSE 100, software firm Micro Focus International tumbled 32% amid a downgrade to full-year profit guidance.
For the year ending October, Micro Focus expects like-for-like revenue to fall between 6% and 8% on the year prior. This is considerably weaker than the 4% to 6% fall previously forecast.
The firm blamed the weakened outlook on "weak sales execution" which was compounded by the "deteriorating" global economic environment which had resulted in more reticent investment activity by customers.
"Management maintains that the sales pipeline has not changed significantly, only the length of the sales cycle and that issues are across its entire product portfolio and in all geographies," Jefferies analyst Julian Serafini commented.
Amid the weaker outlook, Micro Focus decided to "accelerate" its strategic review of the firm which will consider a "range of strategic, operational and financial alternatives."
"We believe that the entirety of the company's portfolio is up for review, noting historically Micro Focus' has been willing to divest assets given the right price and returning proceeds to shareholders (eg SUSE)," Serafini added. "We note management has previously cited the company's IT security portfolio as requiring operational improvements."
Among London mid caps, shares in loan provider Amigo Holdings plummeted 52% after it delivered a weak outlook.
For the year ending March, Amigo expects its net loan book growth to be "broadly flat" rather than the previous mid-teens growth forecast. At the end financial 2019, Amigo reported a net loan book of GBP707.6 million and at the end of its first quarter financial 2020 this had grown 14% to GBP728.4 million.
Amigo announced it is prioritising new customer lending over existing customers, with an expected fall in repeat lending as a result. Amigo has made the move amid a "proactive and pragmatic" approach to an "evolving regulatory and economic environment".
At the other end of the FTSE 250, oil industry services firm Hunting ended 5.2% higher after profit and revenue jumped in well-received interim results.
For the six months ended June, pretax profit widened 5.5% to USD40.1 million after revenue surged 15% to USD508.9 million. This was amid growth being reported across all its geographical segments.
Homeserve closed 5.0% higher at 1,142p after Swiss bank UBS raised the home emergency repairs business firm to Buy from Neutral, hiking its price target to 1,350p from 1,050p prior.
On AIM, brickmaker Brickability was well-received by the market following its initial public offer with shares closing 4.6% higher than the listing price at 68p on its first day of trading.
Brickability - which joins peer Michelmersh Brick Holdings on AIM, itself closing up 3.6% - raised GBP57 million through the IPO. With a market capitalisation of GBP150 million, this makes Brickability the second-largest junior market listing of 2019 after GBP185 million market-cap bar chain Loungers in April.
Horizonte Minerals ended 36% higher after it secured USD25 million in funding from Orion Mine Finance as part of a royalty agreement to help advance its Araguaia ferro-nickel project in Brazil. The royalty only applies to the first 426,429 tonnes of contained nickel within the final product.
Brent oil was quoted at USD60.85 a barrel at the London equities close, higher than USD60.62 Wednesday.
Gold was quoted at USD1,536.50 an ounce at the equities close, essentially flat from USD1,536.29 Wednesday.
On Wall Street, the Dow Jones and S&P 500 indices were both trading 1.2% higher, and the Nasdaq Composite was up 1.5%.
The US economy grew 2.0% on the year prior during the three months ended June, down from the 2.1% previously estimated in a preliminary reading. This primarily follows a downward revision of state and local government spending as well as of exports.
In the first quarter of 2019, the US economy had grown a far more robust 3.1% on a year before.
There were hopes for a pause in the escalation of the trade war between the US and China after calming words from Beijing that it would look to stop the punishing tit-for-tat tariff battle with Washington.
"China has sufficient means to take counter-measures, but under the current situation, we believe that the issue that should really be discussed is cancelling further tariffs on USD550 billion of Chinese goods, and preventing the trade war from continuing to escalate," Chinese Commerce Ministry spokesman Gao Feng said.
US President Donald Trump had proposed hiking tariffs on USD550 billion of Chinese goods already or about to face duties. This followed China announcing taxes on goods worth USD75 billion from the US following Washington launching new duties on USD300 billion in Chinese goods.
In the economic calendar on Friday, Japan releases consumer inflation and unemployment data, as well as industrial production and retail trade sales.
In Europe, German retail sales figures are printed at 0700 BST. The headline eurozone data comes at 1000, with eurozone consumer inflation and unemployment rate data printed.
In the US, personal spending figures are released at 1330 BST.
In the UK corporate calendar on Friday, annual results are released by distribution firm Clipper Logistics and builders merchant Grafton Group. Interim results are due from healthcare firm Cathay International Holdings and medical software company EMIS Group
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