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(Alliance News) - Stocks in London were mostly higher early Monday, with the FTSE 100 boosted by miners riding the wave of the stronger economic data from the US and China at the end of last week.
The FTSE 100 index was 27.90 points, or 0.3%, higher at 7,327.48 early Monday. The FTSE 250 was up 80.28 points, or 0.4%, at 20,239.05, with the AIM All-Share down 0.1% at 889.95.
The Cboe UK 100 index was up 0.5% 12,420.20. The Cboe UK 250 was up 0.5% at 18,170.66 and the Cboe UK Small Companies was down 0.1% at 11,245.40.
CMC Markets David Madden commented: "The first trading day of the month was positive thanks to a strong non-farm payrolls update on Friday. European plus US equity markets finished higher as there was a renewed sense of optimism due to the US jobs update."
The US Labor Department said the country created 128,000 net new jobs in October, surpassing the 80,000 expected, while the figure for the previous two months was also revised upwards.
In European equities early Monday, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both 0.4% higher.
The pound was quoted at USD1.2938 early Monday, soft against USD1.2941 at the London close on Friday.
Chinese and US officials sent positive signals about their efforts to formalize the partial trade bargain announced last month, with President Trump saying he may meet with Chinese counterpart Xi Jinping in the state of Iowa.
Chinese Vice Premier Liu He on Friday spoke by telephone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, a call both sides described as "constructive". However, details remain scarce and the positive statements were almost identical to those made last week, even though Trump announced the partial deal on October 11.
Trump had planned to sign a deal with China's leader Xi Jinping on the sidelines of the now-cancelled summit in Chile this month.
On Friday, Trump told reporters he was "looking [at] a different couple locations" for a meeting with Xi, adding that it "could even be in Iowa."
Madden said: "Overnight, stocks in China traded higher on optimism surrounding the US-China trade situation. On Sunday, Wilbur Ross, US commerce secretary, said the licences for US firms to sell to Huawei will be granted shortly, and that announcement boosted sentiment as it points to progress being made."
In addition, Ross said the US was hopeful that negotiations with Europe, Japan and South Korea on car manufacturing could avert a sharp increase in tariffs later this month.
"Our hope is that the negotiations we've been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect, may not even be necessary to put it partly in effect," Ross told Bloomberg Television, referring to the investigation under Section 232 of a 1962 trade law.
Ross, speaking in Bangkok, where he's attending a regional summit, told Bloomberg discussions thus far have been "very good" with the major car-producing countries in Europe, Japan and South Korea.
There is currently a 2.5% tariff on cars imported into the US from the EU. US President Donald Trump has said he could raise this to 25%.
In Asia on Monday, the Shanghai Composite closed up 0.6%, while the Hang Seng index in Hong Kong is up 1.3% in late trade.
Japanese markets were closed as the country celebrates Culture Day.
In London, IAG was sitting near the top of the FTSE 100, up 1.7%, after agreeing to buy Spanish airline Air Europa for EUR1 billion in cash from Globalia.
In 2018, Air Europa generated EUR67 million in pretax profit on revenue of EUR2.1 billion. Over the same period, IAG - which already owns Iberia and Vueling in Spain, as well as British Airways and Aer Lingus - generated EUR2.89 billion pretax profit on revenue of EUR24.41 billion.
"Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders," IAG Chief Executive Willie Walsh said.
The buy will be funded from debt with the deal expected to complete in the second half of 2020. IAG has agreed to pay a EUR40 million break fee should the transaction fail to achieve regulatory approval, resulting in the acquisition being cancelled.
Whitbread was up 1.0% after stockbroker Peel Hunt initiated the Premier Inn-parent with a Buy rating.
Mining stocks were higher after manufacturing data released at the end of the last week from the two largest global economies pointed to an improved outlook for demand for industrial metals.
Glencore was 1.5% higher, Anglo American 1.2%, Rio Tinto 1.1%, Antofagasta 1.1% and BHP 1.1%. Steel maker Evraz was up 1.3%.
On Friday, the ISM reported the US manufacturing PMI rose to 48.3 from 47.8 in September, meanwhile the IHS Markit final US manufacturing PMI strengthened to 51.3 in October from 51.1 in September. Any figure above 50 represents expansion rather than contraction in the sector.
Earlier the same day, the Caixin China General Manufacturing purchasing managers' index rose to 51.7 in October from 51.4 in September, representing the third consecutive month in which conditions have improved.
At the other end of the London blue-chip index, Hiscox was 2.0% lower.
The insurer said its premiums growth was "good" over the first nine months of 2019, but its combined ratio was affected by an active period for claims amid a trio of natural disasters.
For the nine months ended September, gross written premiums grew 5.6% to USD3.21 billion from USD3.04 billion a year prior. On a constant currency basis, gross written premiums grew 7.3% on the year before.
"The third quarter has been an active period for claims, with the market experiencing significant catastrophe losses from storms in the US, the Caribbean and Japan," Chief Executive Officer Bronke Masojada said. "Paying claims is what we are here for, and we have reserved USD165 million for claims from Hurricane Dorian and Typhoons Faxai and Hagibis. We expect an additional impact from lower fees and profit commissions."
For the full year, Hiscox expects its combined ratio of between 97% and 99%. Any combined ratio below 100% means an insurer made a profit from its underwriting.
Over the medium term, the Hiscox is targeting a combined ratio of between 90% and 95%.
Among London midcaps, direct marketer 4imprint was 3.8% higher after saying it expects double-digit annual revenue growth driven by "robust" demand.
4imprint said it has experienced growth in both new and existing customer orders consistent with that seen in the first half.
4imprint added: "The relatively new brand recognition element of the group's marketing activities continues to perform well. As a result, the board expects a strong full-year trading performance, with revenue growth of around 16% over 2018."
4imprint recorded pretax profit of USD44.2 million for the 52 weeks to December 29, 2018, on revenue of USD738.4 million.
Pets at Home was 2.0% higher after Liberum upgraded the pet retailer to Buy from Hold.
Energean Oil & Gas was up 2.0% following the successful appraisal of its Karish North Discovery, confirming best estimate recoverable resources of 900 billion cubic feet of gas plus 34 million barrels of light oil.
The company said the discovery "significantly enhances" its resource volumes across its Karish and Tanin leases.
Elsewhere in London, Woodford Patient Capital Trust was down 6.3% as Link Fund Solutions will be downwardly revising the valuation of the company's holding in IH Holdings International.
As a result, Woodford Patient Capital's NAV per share is expected to slip 5.0 pence.
At June 30, Woodford Patient Capital said net asset value per share stood at 72.00 pence compared to 97.61p at December 31, representing a 26% decline.
The trust recently appointed Schroder Investment Management Ltd as its new portfolio manager, following exit of star fund manager Neil Woodford.
Schroder Investment Management, part of FTSE 100 listed asset manager Schroders, will takeover as portfolio manager by the end of 2019, when the trust will be renamed Schroder UK Public Private Trust.
Mothercare was down 38% after the mother and baby products retailer said it was nearing a major restructuring plan that could include its British business unit placed into administration.
The retailer has lined up administrators to take over its UK domestic business within days as the company is now dominated by its franchising business outside the UK.
The restructuring of Mothercare UK Ltd, however, is not expected to affect the London-listed parent entity, which is in advanced refinancing talks with lenders.
The administration process would result in a renewed effort to find a buyer for Mothercare and possibly a further restructuring, including another set of shop closures.
In the economic calendar on Monday, manufacturing PMI readings are due from Germany at 0855 GMT and the eurozone at 0900 GMT with construction PMI figures from the UK at 0930 GMT. In the US, factory orders are at 1500 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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