(Alliance News) - Stock prices in Europe closed higher on Friday, ending close to session highs after taking heart from a strong start in New York equity markets.
Retailers led the way in London, with high street names getting a boost from Marks & Spencer, while grocers were lifted by a sweetened bid for Wm Morrison Supermarkets.
The FTSE 100 index ended up 29.04 points, or 0.4%, at 7,087.90 on Friday. It had opened 0.3% higher, but was down as much as 0.4% later in the session. The index lost 1.8% this week.
The mid-cap FTSE 250 index ended up 144.02 points, or 0.6%, at 23,750.89. The AIM All-Share index closed up 0.42 of a point at 1,261.17.
The FTSE 250 lost 0.2% this week, while the AIM All-Share shed 0.4%.
The Cboe UK 100 index ended up 0.5% at 704.70. The Cboe 250 closed up 0.5% at 21,584.93, and the Cboe Small Companies ended marginally lower at 15,306.24.
The CAC 40 in Paris and the DAX 30 in Frankfurt both added 0.3%.
"Having opened lower this morning European markets have recovered as we head into the weekend, however we can't ignore the fact that this week has seen a bit of a shift in sentiment when it comes to optimism about the overall recovery story," CMC Markets analyst Michael Hewson commented.
"Some sectors have taken a bit more punishment than most this week, notably luxury stocks, as well as basic resources over concerns that the combined headwinds of rising delta infections, supply chain constraints and a self-induced slowdown in China means that we've probably seen the peak of the recovery, just over a week since we were posting record highs."
Among the blue-chip stocks in London to have struggled this week are luxury retailer Burberry and miner Rio Tinto. Burberry and Rio Tinto both rose 0.7%. The duo lost 14% and 7.5% this week, however.
Stocks in New York were higher at the time of the London equity market close. The Dow Jones Industrial Average was up 0.5%, the S&P 500 rose 0.6% and the Nasdaq Composite was 0.9% higher.
Weak Asian equities weighed on European stocks earlier in Friday's session, though investors took confidence from what is shaping up to be a strong session in New York.
Highlighting how much the strong start in New York boosted sentiment, lenders NatWest and Lloyds, which had spent most of Friday in the red in London, advanced 0.6% and 0.4%.
JD Sports topped the large-cap index in London, rising 2.9%. The retail sector was lifted by clothing and homewares retailer M&S upping full year guidance. FTSE 250-listed M&S closed up 14%.
M&S is in its 2022 financial year, ending March next year, and noted significant growth on financial 2020 results, which represent pre-pandemic trading.
In the 19 weeks ended August 14, total revenue was up 29% from a year ago and up 4.4% on the same period in financial 2020.
Clothing & Home revenue was up by 92% year-on-year, Food by 11%, and International by 40%.
As a result, M&S lifted its full-year adjusted pretax profit outlook to be above the upper end of previous guidance of GBP300 to GBP350 million.
Elsewhere among high street retailers, Next rose 1.2% and Sports Direct owner Frasers Group climbed 1.8%. AIM-listed online retailer ASOS rose 1.6%.
Morrisons shares closed up 4.2%, the second best mid-cap performer behind M&S. The grocer accepted a new GBP7 billion bid from private equity firm Clayton, Dubilier & Rice late Thursday.
Morrisons is currently valued at GBP7.04 billion.
The company has withdrawn its recommendation for investors to accept a previous GBP6.7 billion takeover deal from a consortium led by Softbank-backed private equity firm Fortress.
Fortress hasn't abandoned yet its effort to buy Morrisons, however.
"This might not be the end of the story. Rival bidder Fortress has urged investors to hold fire on accepting the deal and are expected to make a further statement in due course. With the shares currently trading above the new and improved offer price, the market clearly thinks a better offer is a distinct possibility," Hargreaves Lansdown Equity Analyst Nicholas Hyett commented.
Other grocers rose in a positive read-across. Tesco added 1.0%, Ocado ended up 1.3% and J Sainsbury rose 1.9%.
While retailers had a strong session, the travel sector struggled, amid Delta variant concerns.
British Airways parent International Consolidated Airlines Group fell 0.6%, budget carrier easyJet lost 0.2% and holiday firm On the Beach ended 4.1% lower.
The US dollar was stronger again on Friday, with traders digesting word of the US Federal Reserve's plans to wind down its substantial stimulus measures introduced in the wake of the Covid-19 pandemic.
The pound was quoted at USD1.3621 at the London equities close on Friday, down from USD1.3666 on Thursday. The euro was priced at USD1.1681, soft from USD1.1685. Against the Japanese yen, the dollar was trading at JPY109.81, up from JPY109.75.
"Even shallow dollar dips appear to have been bought. The Federal Reserve's confirmation that it most likely will begin tapering later this year has pushed the greenback further in the direction it was going," Bannockburn Global Forex analyst Marc Chandler commented.
Monday's economic calendar has a slew of flash PMIs, including Japan overnight, before Germany at 0830 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST. Next week also features a gross domestic product estimate for Germany on Tuesday and a second GDP estimate for the US on Thursday.
The Jackson Hole economic policy symposium also kicks off on Thursday. The event will be of particular focus after hawkish signals from the latest US Federal Reserve minutes.
TD Ameritrade analyst JJ Kinahan commented: "Right now, it seems possible that Powell might give some sort of announcement on when the Fed could begin cutting its bond purchases. Many analysts expect tapering to begin by the end of the year. But the start of tapering is only one aspect."
Brent oil was quoted at USD66.02 a barrel late Friday, down from USD66.10 late Thursday. Gold was trading at USD1,783.81 an ounce, up against USD1,781.65.
Monday's local corporate calendar has trading statements from consumer gift packaging firm IG Design Group and home products firm Up Global Sourcing Holdings.
By Eric Cunha; ericcunha@alliancenews.com
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