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(Alliance News) - The FTSE 100 index edged up in Thursday's shortened Christmas Eve session, but it was the pound and the more UK-oriented FTSE 250 that got the biggest lift as Brexit deal optimism dominated trade.
"The discussion has been dragging on for what feels like forever but the mood and the reports in the past 24 hours have been very optimistic, and it feels like we are inches away from a deal being finalised. Traders have been mostly sitting on their hands today and awaiting the update," said David Madden at CMC Markets.
The pound was quoted at USD1.3587 at the London equities close Thursday, up compared to USD1.3525 at the close on Wednesday and 0.7% higher since Friday's market close last week.
The blue-chip FTSE 100 index closed up 6.36 points, or 0.1%, at 6,502.11, ending the week 0.4% lower.
The mid-cap FTSE 250 ended up 248.92 points, or 1.2%, at 20,546.68, gaining an impressive 2.1% since the start of the week. The AIM All-Share closed up 14.11 points, or 1.3%, at 1,127.91, marking a 3.0% surge since the week began.
The Cboe UK 100 ended up 0.1% at 617.40, the Cboe UK 250 closed down 1.7% at 23,745.17, and the Cboe Small Companies ended up 0.7% at 15,373.27.
In European equities on Thursday, the CAC 40 in Paris was flat in late trade. French financial markets will close at just after 2pm local time. Markets in Germany were shut entirely on Thursday.
Negotiations on a UK-EU trade deal are continuing - centred on fish - amid widespread expectation that an agreement is imminent.
Talks in Brussels were focused on the details of fishing rights but both sides have indicated a Christmas Eve deal will be announced, bringing an end to months of wrangling just a week before current trading arrangements expire.
UK Prime Minister Boris Johnson has been in close contact with European Commission President Ursula von der Leyen in recent days as top-level efforts intensified to get a deal over the line. The pair were expected to use a call on Christmas Eve to clinch the deal.
The EU and Downing Street were poised to announce agreement on Wednesday night, but that slipped as last-minute wrangling continued. On Thursday morning a UK source told PA "they're still going on fish" – the issue which has been one of the major stumbling blocks in the path to a deal.
Members of the UK Parliament and peers would be recalled from their Christmas break to vote on a deal next week, but the European Parliament has said they will not have time to ratify a deal before January 1 – meaning any agreement is likely to be provisional.
Amid Brexit deal optimism, banks ended among the best blue-chip performers in London, with Lloyds Banking gaining 4.0%, Barclays closing up 1.8% and NatWest up 1.2%.
"Lloyds, Barclays and NatWest are very much domestically focused and seeing as banks are the heart of the economy, they should benefit from the trade deal. The fact that a no-deal scenario appears to have been dodged has boosted the sector because there were fears that their provisions for bad debts would surge in a no-deal environment," said CMC's Madden.
Another group ending higher were housebuilders, with Berkeley rising 1.7% and Persimmon 1.6% - both also highly exposed to the UK domestic economy.
Elsewhere in London, Network International ended up 7.0% on plans to review and issue a response to a critical report published by short seller ShadowFall Research in relation to the company's link with failed German digital payments provider Wirecard.
On Monday, the FTSE 250-listed payments solutions provider reported no evidence of wrongdoing by Nairobi-based online commerce platform Direct Pay Online Group with regards to DPO subsidiary AnconaOnline's connections with Wirecard. Network International is in the process of buying DPO for USD288 million.
Freshfields Bruckhaus Deringer said it did not find any evidence of any wrongdoing by DPO or its management, stating that "no Wirecard directors or executives, past or present at any time, have ever been involved in the management of DPO."
However, short seller ShadowFall Research cast aspersions on Network International, claiming: "It appears that Network International has form in buying businesses at a significant cost, only to several years later impair almost all the value which was paid in cash. We believe this should raise concern. Especially in the context of its latest USD288 million acquisition of DPO Group."
On Thursday, Network International noted the report, saying: "We take any critique of the company seriously. While we believe many of the issues raised have already been addressed, the historical nature of certain statements in the report means that a full response will take some time."
On AIM, Coral Products surged 62% as it agreed to sell Coral Products Mouldings and Interpack to One51 ES Plastics UK for GBP7.9 million, almost equal to Coral's entire market capitalisation.
Coral Products Mouldings is a manufacturer and distributor of plastic injection, extruded and blow moulded products, and Interpack is a food packaging distributor.
The plastics manufacturer and distributor said it will continue to hold the freehold for the Haydock site from which Coral Products Mouldings operates and intends to enter into a 10-year lease with One51 at an annual rent of GBP300,000 with a 5-year break clause and a rent review after 5 years.
The euro stood at USD1.2197 at the London equities close Thursday, flat against USD1.2195 at the normal closing time on Wednesday. Against the yen, the dollar was trading at JPY103.62 compared to JPY103.55 late Wednesday.
Stocks in New York are on course for a higher start, with the Dow Jones, S&P 500 and Nasdaq all called up 0.2%. Financial markets in the US will close early on Thursday, at 1300 New York time or 1800 London time.
Brent oil was quoted at USD50.74 a barrel at the London equities close Thursday, falling from USD51.03 late Wednesday. Gold was quoted at US1,874.60 an ounce, firm against USD1,872.05 at the close on Wednesday.
The economic calendar is quiet when UK markets return from the Christmas break on Tuesday, with US consumer confidence at 1500 GMT.
Markets in the US, France and Germany will reopen on Monday - though the Frankfurt Stock Exchange's last trading day of 2020 will be Wednesday, with German markets shut on Thursday for New Year's Eve.
UK markets will close early on New Year's Eve and will be shut next Friday for New Year's Day, with the first trading session of 2021 getting underway on Monday 4 January.
There are no events scheduled in the UK corporate calendar for next week, though things will pick up in the new year as London-listed retailers such as Next, Wm Morrison Supermarkets and Marks & Spencer report their trading fortunes over the Christmas period.
By Lucy Heming; lucyheming@alliancenews.com
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