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(Alliance News) - A resilient FTSE 100 grew in confidence and edged marginally higher on Monday, though European peers struggled, in a downbeat session dominated by energy supply worries on the continent.
London's flagship index was supported by share price gains for miners and defence firm BAE Systems, the latter rising after Liz Truss - who has backed increasing defence spending - won the race to become the next UK prime minister.
Elsewhere, there was also M&A activity, PMI readings and a planned OPEC+ oil output cut for investors to mull over during a busy start to a key week for financial markets. Later this week, there are interest rate decisions from the Reserve Bank of Australia on Tuesday, the Bank of Canada on Wednesday and the European Central Bank on Thursday.
The FTSE 100 index ended up 6.24 points, 0.1%, at 7,287.43 on Monday. The mid-cap FTSE 250 index lost 223.54 points, or 1.2%, at 18,629.68. The AIM All-Share index lost 5.05 points, or 0.6%, at 861.14.
The Cboe UK 100 index closed marginally higher at 727.82. The Cboe 250 fell 0.8% to 16,028.49, and the Cboe Small Companies ended down 0.4% at 13,677.51.
In mainland Europe, the CAC 40 in Paris ended down 1.2%, while the DAX 40 in Frankfurt lost 2.2%.
Markets in New York were closed for the Labor Day holiday on Monday and re-open on Tuesday.
Sterling was priced at USD1.1507 at the time of the London equities close on Monday, down from USD1.1575 late Friday.
Truss promised a "bold plan" to cut taxes, deal with the energy crisis and deliver a Tory victory in 2024 as she prepares to take office as the UK's next prime minister.
She defeated rival Rishi Sunak by 81,326 votes to 60,399 to win the Tory leadership, and will replace Boris Johnson in Number 10 on Tuesday.
"The new prime minister's in-tray is overflowing with problems marked urgent, but none is more pressing than the cost-of-living catastrophe facing companies and consumers. Expectations that a Trussenomics solution will be found by slashing taxes and spending big is fuelling worries that inflation will not easily be brought under control and that the Bank of England will be forced to keep raising rates and keep them elevated for longer," Hargreaves Lansdown analyst Susannah Streeter commented.
Housebuilder Berkeley Group and property portal Rightmove fell 1.2% and 2.1% over fears of what more interest rate hikes would mean for UK housing sector activity.
BAE Systems closed 3.0% higher, one of the best blue-chip performers. Truss has pledged to lift defence spending to 3% of UK gross domestic product by 2030.
Also helping the FTSE to keep its head above water were share price gains for miners. Glencore climbed 4.0%, the best FTSE 100 performer, while Antofagasta added 2.0%.
The euro traded at USD0.9919 late Monday, down from USD1.0027 late Friday. The single currency was hurt by energy supply worries.
On Friday, Gazprom said that a gas pipeline to Germany - which was due to reopen at the weekend - would remain shut until a turbine is repaired, cutting off indefinitely an energy supply route to Europe.
A poor PMI reading did little to boost the euro either. The eurozone's private sector fell into decline in August, as a drop in demand and cost-of-living concerns led to weakness in business activity, data from S&P Global showed.
The eurozone services PMI fell to 49.8 points in August from 51.2 points in July, falling below the neutral mark of 50.0 points to indicate a contraction. The reading for August was a 17-month low.
Against the yen, the dollar was quoted at JPY140.53 at the time of the London equities close on Monday, up from JPY140.05 late Friday.
Brent oil was trading at USD95.49 a barrel, up from USD94.00 late Friday. The higher North Sea benchmark price boosted BP and Shell, who finished 2.0% and 0.9% higher.
The OPEC+ oil cartel agreed Monday to cut production for the first time in more than a year as it seeks to lift prices that have tumbled due to recession fears.
The move could irk the US, as it has pressed the group to increase output in order to bring down energy prices that have fuelled decades-high inflation.
While analysts had expected another modest increase at Monday's ministerial meeting, OPEC+ said in a statement that it decided to reduce output by 100,000 barrels per day in October, returning to the production level of August.
Back in London, Countryside Properties rose 5.3%. The housebuilder agreed to be acquired by peer Vistry Group.
The cash-and-shares deal, worth about GBP1.25 billion, values Countryside shares at 249 pence each, a 9.1% premium to its closing price on Friday.
Vistry is offering 0.255 of a share and 60 pence cash for each Countryside share. The merger is expected to close in the first quarter of 2023. Countryside shareholders will own about 37% of enlarged firm.
Vistry shares closed up 1.1%.
Dechra slid 10%. The veterinary products firm warned that growth rates are normalising as pandemic tailwinds ease.
In the financial year that ended June 30, Dechra reported revenue of GBP681.8 million, up 12% from GBP608.0 million the year before. Pretax profit increased 4.9% to GBP77.6 million, compared to GBP74.0 million in 2021.
Dechra, however, noted that revenue in the second half of the year normalised to historic levels of growth, as the benefit of increased spending on pets seen during the Covid-19 restrictions slowed down.
Asos shares ended 3.7% lower. The retailer has privately told analysts it expects annual pretax profit at the lower end of its guidance range, the Sunday Times reported.
Asos in June said it expects adjusted pretax profit in the range of GBP20 million to GBP60 million. Asos ended its financial year in late-August.
The Sunday Times reported the online only retailer has now briefed City analysts that it expects profit in the lower end of that range, blaming high customer clothing return rates.
Engineering company Mincon surged 14%. It signed the first commercial pact for its Greenhammer drilling system.
The contract is with an unnamed blue-chip mining contractor on a "major" gold mine in Western Australia.
Gold was quoted at USD1,710.56 an ounce late Monday, up from USD1,713.90 late Friday.
Tuesday's local corporate calendar has first-quarter results from equipment rental firm Ashtead Group. Oil and gas firm Capricorn Energy reports interim results.
The economic calendar has a UK construction PMI reading at 0930 BST, before US services PMI data at 1445 BST.
By Eric Cunha; ericcunha@alliancenews.com
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