(Alliance News) -Â European stocks markets were brighter on Wednesday, waving away inflation worries to claw back recent losses.
"A small drop in Treasury yields has eased some of the pressure on equities, and with market internals approaching 'washout' levels again the urge to buy the dip has come storming back," commented Chris Beauchamp, chief market analyst at IG.
London's blue-chip FTSE 100 index advanced ahead of European counterparts, lifted by a weaker pound as well as share price gains for AstraZeneca and Next.
The FTSE 100 index closed up 80.06 points, or 1.1%, at 7,108.16. The FTSE 250 ended up 21.87 points, or 0.1%, at 23,150.97, and the AIM All-Share closed down 2.41 points, or 0.2%, at 1,253.56.
The Cboe UK 100 ended up 1.1% at 706.32, the Cboe UK 250 closed down 0.5% at 20,927.76, and the Cboe Small Companies ended down 0.2% at 15,687.62.
In European equities on Wednesday, the CAC 40 in Paris and the DAX 40 in Frankfurt both ended up 0.8%.
Helping to drive the FTSE 100's outperformance was a weak pound, trading at USD1.3434 at the London equities close Wednesday, down from USD1.3545 at the close on Tuesday.
Sterling was trading around its worst levels since January.
"Comments from Bailey earlier this week encouraged fears about stagflation...In our view, UK households and businesses in will already be tested by higher fuel and energy bills and by next year's rise in national insurance taxation. These pressures raise the risk that a rate hike will unduly suppress domestic demand and weigh on GDP growth," commented Rabobank.
Bailey on Monday warned that the UK's pandemic recovery is slowing, but said modest tightening may be warranted to bring inflation back to target. He noted that the economic recovery from the pandemic is decelerating, and supply chain disruptions and labour shortages are presenting fresh headwinds to the rebound.
His comments came amid mayhem on petrol station forecourts in the UK, with worries over a shortage of lorry drivers sparking panic buying.
UK Prime Minister Boris Johnson said the situation on the filling station forecourts is "stabilising" as he urged motorists to go about their business in the normal way. Following days of chaos, with long queues for petrol and stations running dry, Johnson said he understood the frustration felt by drivers as they struggled to fill up.
The PM tried to calm nerves about the supply chain problems affecting businesses across the country.
"What we want to do is make sure that we have all the preparations necessary to get through to Christmas and beyond, not just in the supply in the petrol stations, but all parts of our supply chain."
Also helping to boost London's blue-chip stock index was Next, rising 3.9% on an upgrade to profit guidance.
For the six months to July 31, the clothing and homewares retailer achieved revenue of GBP2.12 billion, up 5.2% from GBP2.01 billion at the same time in 2019, and pretax profit was GBP346.7 million, up 5.9% from GBP327.4 million. Compared to last year, Next swung to a pretax profit from a loss of GBP16.5 million.
Next said it now expects a pretax profit for the full year of GBP800 million, up 6.9% versus 2019 and GBP36 million ahead of its previous guidance.
Shares in AstraZeneca advanced 4.2% after exercising an option buy out Caelum Biosciences in a bid to accelerate the development of organ function drug CAEL-101.
The Cambridge-based pharmaceuticals firm's recently acquired rare diseases division, Alexion, already owns a non-controlling stake in Caelum currently worth USD150 million. In a deal struck in 2019, Alexion also has an exclusive option to buy the remainder of Caelum for USD150 million. It will then make additional payments of up to USD350 million, conditional on regulatory and commercial milestones.
Caelum is a Bordentown, New Jersey-based biotechnology company dedicated to developing treatments for AL amyloidosis, a rare disease that affects the heart, kidneys and other organs.
At the bottom of the index was Royal Mail, falling 8.8% on a downgrade to Sell from Buy at UBS.
"We see downside risks to consensus Ebit next year. Increasing opex cost pressures are coming at a time when the pricing power within the industry is likely to decline as more parcel sortation capacity is added in 2022," said UBS.
Towards the bottom of the mid-cap FTSE 250 index was SSP Group, falling 5.4%. The firm, which operates food and drink outlets in airports and railway stations, warned its sales recovery in the next financial year will be slower than expected.
In the fourth quarter of the 2021 financial year, which ends Thursday, revenue is expected to be around 47% of the level in the same period two years ago. That's an improvement on the third quarter, when revenue was 27% of the pre-pandemic equivalent.
Looking ahead, SSP continues to expect to return to pre-Covid revenue and earnings before interest, tax, depreciation and amortisation margin by 2024.
However, it said: "However, the pace of the recovery remains uncertain, and as a consequence, our current planning assumption is for a slightly slower recovery in sales during the 2022 financial year."
Stocks in New York were mostly higher at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 0.4%, and the Nasdaq Composite flat.
The euro stood at USD1.1618 at the European equities close Wednesday, down against USD1.1684 at the same time on Tuesday. Against the yen, the dollar was trading at JPY111.85, up compared to JPY111.27 late Tuesday.
Brent oil was quoted at USD79.09 a barrel at the London equities close Wednesday, edging up from USD79.00 late Tuesday. Gold was quoted at USD1,732.75 an ounce, down against USD1,739.12 at the close on Tuesday.
Thursday's economic calendar has Japanese retail sales at 0050 BST and PMIs from China at 0200 BST. UK Nationwide house prices are at 0700 BST, with GDP due the same time.
German unemployment is at 0855 BST and the same from the eurozone is out at 1000 BST, followed by German inflation at 1300 BST. US GDP is out at 1330 BST.
The UK corporate calendar on Thursday has half-year results from online fashion retailer boohoo, cancer immunotherapies developer Avacta and cell and electrochemical technology maker Ceres Power Holdings.
By Lucy Heming;Â lucyheming@alliancenews.com
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