(Alliance News) -Â Stocks moved off morning lows on Monday, but prices were mixed and the mood remained subdued, as traders monitor the latest developments in the Evergrande saga.
While shares in Wm Morrison Supermarkets fell following the conclusion of its takeover drama, fellow listed grocers were lifted on hopes they could be next to be snapped up in multi-billion-pound deals.
The FTSE 100 index was up 9.73 points, or 0.1%, at 7,036.80 midday Monday. The mid-cap FTSE 250 index was down 72.84 points, or 0.3%, at 22,902.93. The AIM All-Share index was down 2.18 points, or 0.2%, at 1,228.95.
The Cboe UK 100 index was up 0.2% at 698.87. The Cboe 250 was down 0.3% at 20,739.89, and the Cboe Small Companies down 0.1% at 15,593.85.
In mainland Europe, the CAC 40 in Paris was flat and the DAX 40 in Frankfurt down 0.1%.
"It has been a largely downbeat affair for European markets...as fears around Chinese growth continue to provide uncertainty for traders," said Joshua Mahony, senior market analyst at IG.
Embattled property developer China Evergrande suspended trading in its shares in Hong Kong on Monday pending an announcement on a "major transaction", as the firm struggles in a sea of debt and faces a default.
The halt comes as reports said Hong Kong real estate firm Hopson Development Holdings planned to buy a 51% stake in Evergrande's property services arm. Hopson shares also were suspended from trading in Hong Kong, also citing the upcoming "release of announcement(s) in relation to a major transaction".
IG's Mahony remarked: "The proposed USD5.1 billion deal would provide crucial cashflow at a time of need, yet the questions remain over whether these fire-sales will be enough to stave off an eventual collapse that has been speculated as the biggest default in history."
Officials at the firm have been struggling to deal with a crisis that has left it more than USD300 billion in debt, fuelling fears of a contagion for the wider Chinese economy that some warn could spread globally.
Stocks in the US appeared unfazed by the latest Evergrande developments, instead looking to add to Friday's rebound. The Dow Jones was called to open 1.2% higher and the S&P 500 was seen 0.9% higher. The tech-heavy Nasdaq Composite was pointed down 0.3%, however.
"The US dollar is showing some weakness during early Monday trading but remains close to its highest level so far this year achieved last week," said Ricardo Evangelista, senior analyst at ActivTrades.
Sterling was quoted at USD1.3577 on Monday, rising from USD1.3550 at the London equities close on Friday.
The euro traded at USD1.1613, up from USD1.1592 late Friday. Against the yen, however, the dollar was higher, at JPY111.28 versus JPY111.06.
Brent oil was trading at USD79.44 a barrel midday Monday, up from USD78.44 late Friday as traders await a decision from the latest meeting of oil cartel Opec and its allies. Opec has been sticking to an increase in production of 400,000 barrels per day, agreed in July, but could nonetheless be tempted to open the taps further, amid recently high prices.
Gold was quoted at USD1,750.09 an ounce, pulling back from USD1,757.98 on Friday.
Weighing on London's FTSE 100 at midday was telecommunications firm BT, tumbling 7.0% after the Sunday Telegraph reported that Sky is nearing a deal to become an investor in Virgin Media O2's full fibre broadband roll-out.
Sky is in talks about backing Virgin Media O2's plan to challenge BT's dominance by upgrading 14 million homes and businesses to ultrafast broadband, the Telegraph said.
Also in the red was grocer Wm Morrison Supermarkets, shares trading 3.8% lower at 285.80 pence as a protracted takeover war for the supermarket chain drew to a close.
Clayton, Dubilier & Rice emerged victorious with a 287p-per-share bid, valuing Morrisons at almost GBP7 billion. It pipped rival Fortress to the post, the Softbank-backed firm offering 286p per share.
The final offer for the supermarket, which last month was promoted back into the FTSE 100 index of London blue-chips, will now be voted on by shareholders on October 19. The takeover saga has dragged on since CD&R first made an approach for the Bradford-based grocer back in June, leading to speculation the sector was ripe for private equity takeovers.
Fellow grocer J Sainsbury was leading the blue-chip gainers at midday, up 4.0%, amid hopes it could be next to be snapped up. Peer Tesco rose 1.4% and online grocer Ocado rallied 1.3%.
Topping the FTSE 250 was Plus500, up 5.3% after guiding to a full-year earnings beat following "further positive momentum" in the third quarter of 2021.
The online trading platform now expects full-year revenue and earnings before interest, tax, depreciation and amortisation to be ahead of current analyst forecasts, which stand at USD555.8 million and USD277.9 million, respectively, according to company-compiled consensus.
This will still fall short of 2020's tough comparatives, when revenue more than doubled to USD872.5 million, while Ebitda surged to USD515.9 million.
Sinking to the bottom of the mid-caps was Frasers Group, tumbling 6.2% as Bank of America slashed its rating on the retailer to Underperform from Buy.
Elsewhere in London, Ryanair shares rose 1.5% after revealing traffic more than doubled to 10.6 million in September from 5.2 million a year ago, while load factor improved to 81% from 71%. September's figure slipped from August's 11.1 million passengers, however.
The Irish budget airline's update came the same day as travel rules are relaxed in the UK.
Instead of the heavily-criticised traffic-light system, slammed by many for causing confusion, locations are now categorised as either on the red list or not - and there are UK press reports that the number of countries on the red list will be slashed to 9 from 54 later in the week, with destinations such as Brazil, Mexico and South Africa expected to be opened up to quarantine-free travel.
Fully vaccinated residents – and unvaccinated under 18s – from more than 50 countries and territories can now enter the UK without needing to complete a pre-departure lateral flow test, take a day-eight post-arrival PCR test costing around GBP65, or self-isolate at home, with just a single day-two post-arrival test needed.
Shares in French Connection leapt 18% to 28.42p after backing a takeover bid by a consortium that includes its second-largest shareholder, seven months after the fashion brand put itself up for sale, with Founder & Chair Stephen Marks announcing he will step down once the deal concludes.
French Connection has recommended a bid from MIP Holdings that values it at GBP29 million, or 30p per share - a 92% premium to the retailer's share price on February 4, before it entered an offer period.
By Lucy Heming;Â lucyheming@alliancenews.com
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