LONDON (Alliance News) - UK stocks opened higher Tuesday, after Chinese equities turned positive following mixed trade data, while shares in specialty insurer and reinsurer Amlin shot higher after it agreed to be acquired by Mitsui Sumitomo Insurance.
The FTSE 100 traded up 1.1% at 6,139.44, the FTSE 250 was up up 0.9% at 16,994.32 and the AIM All-Share traded up 0.1% at 733.34.
In Europe, the French CAC 40 was up 1.1% and the DAX 30 was up 1.3%. The stock price movements came after data published by Destatis showed German exports and imports grew more than expected in July, taking the the nations trade surplus to a record level.
Germany's exports rose 2.4% month-on-month to EUR103.4 billion in July. This was the fastest growth since December 2014. Economists had forecast shipments to grow 1% reversing a 1.1% fall in June. At the same time, imports advanced 2.2% to EUR80.6 billion in July, beating expectations of a 0.7% rise. Imports had declined 0.8% in June. These were the highest seasonally adjusted monthly figures ever calculated both for exports and for imports, Destatis said.
Meanwhile France's trade deficit in July widened by more than expected from the previous month as both exports and imports moderated, figures from French Customs showed. The trade deficit increased to EUR3.30 billion from EUR2.76 billion in June, which was the smallest since July 2009. Economists had forecast a shortfall of EUR3.10 billion.
Exports moderated in July to EUR38.9 billion from EUR39.6 billion in June mainly due to slowdown in transport equipment shipments, after touching a peak in June. Imports dropped to EUR42.2 billion from EUR42.3 billion as the decline in the oil bill and weaker demand for aeronautics offset the purchases of other industries, especially automobile, the agency said.
In Asia, the Nikkei in Tokyo closed down 2.4%, while the Hang Seng was up 2.1% and the Shanghai Composite was up 2.9%.
China posted a trade surplus of USD60.24 billion in August, the National Customs Office said, well above forecasts for a surplus of USD48.0 billion and up from USD43.03 billion in July.
Exports were down 5.5% on year, also bettering expectations for a fall of 6.6% after tumbling 8.3% in the previous month. Imports skidded an annual 13.8% versus expectations for a fall of 7.9% and after dropping 8.1% a month earlier.
In yuan-denominated terms, exports fell 6.1% on year and imports plummeted 14.3% for a trade surplus of CNY368.03 billion.
After the release of weak export figures last month, the People's Bank of China devalued its currency on August 11 in an effort to support exports. The devaluation was the biggest one-day reduction in value in two decades.
As the central bank sold dollar to stabilize the yuan exchange rate, country's foreign exchange reserves declined by the most on record in August. Foreign exchange reserves fell by USD93.9 billion to USD3.56 trillion in August. The PBoC also cut its interest rates in August for the fifth time since last November and reduced the reserve ratio to support bank lending.
However, concerns still remain about the world's largest economy with the country's imports declining by much more than expected, signalling weak domestic demand.
On the London Stock Exchange, Amlin said it has agreed to be acquired by Mitsui Sumitomo Insurance Co Ltd in a deal valuing the insurer at about GBP3.47 billion, as the wave of mergers and acquisitions continues across the industry.
Mitsui Sumitomo Insurance, which is owned by Japan's MS&AD Insurance Group Holdings Inc, will pay 670 pence per Amlin share. In addition, Amlin shareholder will be able to receive the insurer's 8.4 pence interim dividend declared last month.
The price tag is a 36% premium to Amlin's closing price on Monday and a 2.4 times multiple to the insurer's net tangible book value per share on a fully diluted basis of 275.2 pence at the end of June. At the open Tuesday, the company traded up 33% at 654.00 pence.
Amid expectations of further industry consolidation, Amlin's peers Lancashire Holdings, up 8.6%, Novae Group, up 5.5%, Beazley, up 5.1%, and Hiscox, up 3.0%, all were higher following the news.
Ashmore Group traded up 6.1% after the asset manager reported higher pretax profit in its last financial year, and defended the fundamentals of emerging markets.
Chief Executive Mark Coombs said that sentiment towards emerging markets is being influenced by macroeconomic factors such as the timing of the first US interest rate increase and China's rebalancing of its economy.
Ashmore said it made a GBP181.3 million pretax profit in the financial year ended June 30, compared with GBP171.6 million the prior year.
Whitbread was the biggest of the few decliners in the FTSE 100, down 2.5%. The hotel and coffee shop operator said a rise in sales in the first half of its financial year, boosted by growth in both its Premier Inn and Costa businesses, and it said it is on track to meet expectations for the full year.
However, Chief Executive Andy Harrison said it may have to increase prices to help combat the effect of the National Living Wage.
"We are developing plans to adopt the recently announced National Living Wage. We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases," Harrison said in a statement.
United Utilities Group was up 2.8% after Societie Generale upgraded the water company to Buy from Hold.
In AIM, Conviviality Retail shares were up 26% after the company said it has struck a deal to fully acquire drinks supplier Matthew Clark (Holdings) Ltd for GBP200 million, of which it will pay just over half to fellow-listed Punch Taverns.
The Matthew Clark business is a 50/50 joint venture between Punch Taverns and Hertford Cellars Ltd, a subsidiary of Accolade Wines Ltd. As part of the same transaction, Hertford Cellars will sell its 50% shareholding in Matthew Clark to Conviviality Brands. Conviviality will pay GBP100.7 million to Punch for its 50% stake in Matthew Clark, with the remaining balance being paid for the other 50% stake held by Hertford Cellars.
SQS Software Quality Systems was down 16% after it downgraded its expectations for the full year due to actions it is taking to mitigate margin pressures in its regular testing arm, even as revenue and its pretax profit both increased in the first half.
SQS said it is facing margin pressures in its regular software testing business by reducing client numbers, its overhead costs and headcount. Due to those issues, it is taking a more cautious stance on its outlook for the full year and anticipates its profit will be slightly below its previous expectations.
Still ahead in the economic calendar, eurozone GDP is at 1000 BST before US labor market conditions index at 1500 BST and consumer credit at 2000 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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