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(Alliance News) - Stocks in London were higher at midday on Thursday as investors took heart from economic stimulus measures in France and fresh coronavirus vaccine hopes.
French Prime Minister Jean Castex pledged Thursday to create 160,000 new jobs in 2021 as his government prepares to unleash a massive spending plan for the coronavirus-hit economy.
The French government has earmarked EUR100 billion to counter the devastating impact of the coronavirus at a time when daily virus numbers in France are on the rise again. The sum, a combination of new spending and tax breaks, is four times the amount France spent over a decade ago to deal with the global financial crisis, and represents a third of its typical annual budget.
In addition, vaccine hopes was also lifting sentiment after the Trump administration urged US states to get ready to distribute a potential Covid-19 vaccine by November 1 - two days before the presidential election.
Dallas-based wholesaler McKesson Corp has a deal with the US government and will be requesting permits to set up distribution centers when a vaccine becomes available.
Trailing Democratic nominee Joe Biden in most national opinion polls since the outbreak of the coronavirus, US President Donald Trump has attempted to alter the narrative from the pandemic. Trump pointed to Black Lives Matters protesters for violence in US cities and has accosted his rival of being weak on crime.
FiveThirtyEight's polling tracker has Biden ahead of Trump by 7.3 percentage points.
In London, the blue-chip FTSE 100 index was up 47.18 points, or 0.8%, at 5,988.13. The mid-cap FTSE 250 index was up 133.79 points, or 0.8%, at 17,838.21. The AIM All-Share index was up 0.1% at 969.19.
The Cboe UK 100 index was up 0.8% at 595.69. The Cboe 250 was up 1.1% at 15,178.68, and the Cboe Small Companies was up 0.1% at 9,388.25.
In mainland Europe, the CAC 40 index in Paris was up 1.5%, while the DAX 30 in Frankfurt was up 1.1%.
"News that France is throwing an additional EUR100 billion at its economy, and comments about the strength of the euro from ECB policymakers, have combined to provide fresh impetus to the rally in European stocks," said IG Group's Chris Beauchamp.
"Equities continue to exhibit notable strength as they rise heedless of the ongoing tick higher in virus cases and signs that the economic rebound is slowing. With the US also discussing fresh attempts to provide cash for workers there is additional hope that governments will continue down the path of stimulus in order to cushion the economy from renewed lockdowns or viral outbreaks," Beauchamp added.
On the London Stock Exchange, Melrose Industries was the best blue-chip performer, up 12% after the industrial turnaround specialist said it has seen positive signs for a recovery in its markets as coronavirus lockdown measures ease.
For the half year ended June 30, revenue fell 26% to GBP4.12 billion from GBP5.57 billion last year and its pretax loss widened to GBP685 million from GBP109 million a year before.
The company has high exposure to the battered aerospace and automotive sectors following its acquisition of GKN in 2018.
Melrose said trading over the summer months has been at the higher end of expectations, particularly in automotive and key Nortek markets. The company also backed its business model to "once again deliver" in the challenging circumstances brought about by the pandemic.
Melrose added that organically, it sees some early signs of recovery in certain geographies.
"We remain confident in the management's ability to navigate through these difficult times and see the green shoots of recovery as a promising sign with trading in China already ahead of last year and North America improving quickly," said analysts at the Share Centre.
At the other end of the large caps, Admiral Group and BHP were the worst performers, down 3.6% and 2.8% respectively after the stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.
Next was down 2.5% after Morgan Stanley cut the clothing and homewares retailer to Underweight from Equal Weight.
The pound was quoted at USD1.3278 Thursday midday, down from USD1.3302 at the London equities close Wednesday, as Brexit fears returned to the fore.
On Wednesday, the European Union's chief negotiator Michel Barnier warned that the UK risks crashing out of the bloc without a trade deal by refusing to compromise and break the deadlock in post-Brexit negotiations.
Barnier said on Wednesday that he is "worried and disappointed" after his counterpart in Downing Street, David Frost, did not make any concessions to end the impasse during informal talks.
The EU negotiator reiterated that a deal must be brokered by the "strict deadline" of the end of next month in order to have it in place for the close of the transition period on December 31.
"There is a full round of further negotiations next week, however, it seems highly unlikely we will see any major breakthroughs, if previous history is anything to go by. Barnier has stated that a deal must be done by the end of October to leave time for it to be ratified for the new year so expect sterling to wobble the closer we get to this deadline without anything being rubber-stamped," said analysts at OFX.
On the economic front, UK services sector activity continued to improve in August as consumer spending recovered in the wake of easing lockdown restrictions, IHS Markit said.
The seasonally adjusted IHS Markit/CIPS UK services purchasing managers' index registered 58.8 in August, up from 56.5 in July. The print was shy of the earlier flash estimate of 60.1.
The reading was in expansion territory - coming in above the 50.0 neutral mark - for the second month running and signalled the fastest pace of output growth since April 2015, Markit said.
The euro stood at USD1.1813 at midday in London, lower from USD1.1834, amid a slew of economic data releases from the continent.
The eurozone's private sector lost a bit of momentum in August, data showed, due to a more subdued service economy.
IHS Markit's eurozone composite purchasing managers' index fell to 51.9 in August, still above the 50.0 neutral mark, but below the 54.9 registered in July. The August figure did, however, end up above the 51.6 flash estimate.
The eurozone's services PMI alone fell to 50.5 from 54.7 in July, weighed down by slowdowns in growth for France and both Spain and Italy returning to decline.
Meanwhile, eurozone retail sales in July slumped against market expectations, swinging to a monthly fall with annual growth decelerating, data on Thursday showed.
According to Eurostat, retail sales dropped 1.3% month-to-month in July, following growth of 5.3% in June. FXStreet-supplied consensus predicted a 1.5% monthly sales rise, meaning the July figure was way below market estimates.
Annually, eurozone retail sales inched up 0.4% in July, following a 1.3% rise in June. The market expected a 3.5% yearly rise in July, however.
Against the yen, the dollar was trading at JPY106.33, up from JPY106.14.
In commodities, gold was lower, quoted at USD1,934.41 an ounce midday on Thursday from USD1,941.20 at the London equities close Wednesday. Brent oil was quoted at USD44.35 a barrel, down from USD44.82.
New York is set to open lower on Thursday following fresh record closes for the S&P 500 and Nasdaq Composite on Wednesday.
The Dow Jones Industrial Average was called down 0.2%, the S&P 500 down 0.4%, and the Nasdaq Composite was called down 1.0%, based on futures trading.
Still to come in Thursday's economic calendar are US jobless claims at 1330 BST and an IHS Markit services PMI for the US at 1445 BST followed by the ISM's non-manufacturing PMI at 1500 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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