(Alliance News) - Stock prices in London opened higher on Thursday, as data showed the UK economy returned to growth, and investors increasingly price in the prospect that US interest rates have peaked.
The FTSE 100 index opened up 24.25 points, 0.3%, at 7,644.28. The FTSE 250 was 18.67 points, 0.1%, at 17,894.91, and the AIM All-Share was up 1.83 points, 0.3%, at 697.52
The Cboe UK 100 was up 0.3% at 763.61, the Cboe UK 250 was up 0.2% at 15,566.45, and the Cboe Small Companies was down 0.1% at 13,043.93.
In European equities on Thursday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.3%.
In early economic news, the UK economy returned ever-so-slightly to growth in August, as expected.
The Office for National Statistics estimates that gross domestic product rose 0.2% in August from July, after contracting by a revised 0.6% in July from June. August's reading was in line with FXStreet-cited market consensus. July's decline was downwardly revised from 0.5% shrinkage.
The ONS said that services output, which rose 0.4% during the month, was the only positive contributor to growth in August.
"We still haven't felt the full effect of previous rate hikes, and so the prospects of recession are still looming on the horizon with so little respite expected on sideswiped budgets. At the very most, it appears the UK is in a period of stagflation, with the economy stagnating while inflation stays elevated," commented Hargreaves Lansdown's Susanannah Streeter.
The FTSE 100's miners were on the up amid an improving outlook in China after the country's sovereign wealth fund bought up shares in banks, providing a boost to market confidence. Rio Tinto rose 1.6%, Glencore added 1.4% and Anglo American rose 2.0%.
Housebuilder Taylor Wimpey fell 4.2% as its stock went ex-dividend.
In the FTSE 250, Mobico, the transport provider formerly known as National Express, plunged 20% following a disappointing trading update, as it announced the suspension of final dividends.
Mobico said it now expects annual earnings before interest and tax to come within a range of GBP175 million to GBP185 million, having previously guided for operating profit of GBP200 million to GBP215 million.
The transport firm also said it was preparing its North American school bus business for a potential disposal.
"The board is keenly aware of the importance of dividends to shareholders and the decision to suspend the final dividend was not taken lightly. The board will continue to consider the dividend position as progress is made on deleveraging," said Mobico CEO Ignacio Garat.
Elsewhere on the main market, Restaurant Group shares surged 37% to 66.35 pence.
The Glasgow-based owner of Wagamamas said it has agreed to be acquired by funds managed by private equity firm Apollo Global Management Inc, soon after itself having sold off an underperforming business.
Apollo is a New York-based alternative asset manager. Via acquisition vehicle Rock BidCo Ltd, it is offering to pay 65p per Restaurant Group share in cash. The offer values the equity of Restaurant Group at GBP506 million and the company as a whole, including debt, at an enterprise value of GBP701 million
The company said its board unanimously recommends the offer to shareholders, and acceptances for it already have been received from shareholders representing 19.9% of its total.
In the US on Wednesday, the he Dow Jones Industrial Average closed up 0.2%, with the S&P 500 up 0.4% and the Nasdaq Composite up 0.7%.
Investors will also be reflecting on the latest minutes from the last Federal Open Market Committee's most recent meeting. A majority of Federal Reserve officials expect one more interest rate increase before the end of the year and signalled monetary policy would remain restrictive for some time, the meeting showed.
While there was some debate on the need for a further tightening of the monetary policy screw, all FOMC participants "agreed that policy should remain restrictive for some time until the committee is confident that inflation is moving down sustainably toward its objective."
HL's Streeter commented: "Although minutes from the US central bank's September meeting indicated the door is still open to one more hike to bring down demand, the behaviour of bond markets might be doing the job for them. The shooting up in Treasury yields, making borrowing more expensive across the economy, is already likely to dampen activity."
"Wider market sentiment is hinging on hopes that ultra-cautious stance being adopted by the Federal Reserve will mean that another interest rate rise is less likely."
Sterling was quoted at USD1.2312 early Thursday, higher than USD1.2309 at the London equities close on Wednesday. The euro traded at USD1.0629, higher than USD1.0622. Against the yen, the dollar was quoted at JPY149.10, up versus JPY149.01.
Later in the day, there will be US inflation figures. Annual headline inflation is expected to cool to 3.6% in September from 3.7% in August, as core inflation is expected to fall to 4.1% from 4.3%.
In Asia on Thursday, the Nikkei 225 index in Tokyo closed up 1.8%. In China, the Shanghai Composite closed up 0.9%, while the Hang Seng index in Hong Kong was up 2.0% in late dealings. The S&P/ASX 200 in Sydney closed marginally higher.
Sentiment in Asia was boosted by news that China's massive sovereign wealth fund has bought stakes in the country's biggest banks, fuelling speculation it could broaden its reach to support beleaguered mainland markets.
China's Central Huijin Investment – an arm of the USD1.4 trillion China Investment Corp – had bought USD65 million of shares in the country's banking giants.
Analysts said the purchase of stakes in Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China was aimed at boosting sentiment in mainland markets, which have been hit by worries over the stuttering economy. Huijin was also said to be planning to further boost its holdings.
Gold was quoted at USD1,880.09 an ounce early Thursday, rising from USD1,872.58 on Wednesday. Brent oil was trading at USD85.73 a barrel, a touch lower than USD85.84.
By Elizabeth Winter, Alliance News senior markets reporter
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