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LONDON (Alliance News) - The bounce from post-referendum lows continued midday Wednesday as investors were in the hunt for cheap stocks but uncertainty still clouded the UK's relationship with the European Union, as politicians delay the beginning of Brexit.

"A disconnect is appearing between the pessimistic mood that is permeating the media and the insatiable optimism that seems to be driving yet another day of gains in the FTSE 100," said Joshua Mahony, market analyst at IG.

"There is a confidence within the City that perhaps the implications to this vote may not be as immediate nor far reaching as many initially thought, providing opportunities for bargain hunters to grab shares at a discount," Mahony said.

Outgoing UK Prime Minister David Cameron said he will leave the responsibility of starting the departure process of activating Article 50 of the EU treaty for his successor - to be chosen in September - instead of initiating divorce proceedings immediately.

However, members of the European Union want the UK to begin the process sooner rather than later. EU Council President Donald Tusk said on Tuesday that there was "understanding that some time is needed" before London can make a move, but said Cameron was asked to "specify as soon as possible" when this would happen.

"Post-Brexit is years away, and the politicians are cleverly stalling the process," commented Augustin Eden, analyst at Accendo Markets. "Until the machine is set going - until Article 50 is invoked - all is stable."

As on Tuesday, it was financial and housebuilding stocks amongst the best performers, having suffered the most in the immediate aftermath of the vote.

Specialist lender Shawbrook Group, up 23%, was the best performer in the FTSE 250 having been hit hard by the Brexit vote and again on Tuesday when its said its chief financial officer resigned and it will book an impairment charge due to irregularities uncovered in its Asset Finance unit.

The FTSE 100 traded up 2.1%, or 131.01 points, at 6,271.40. The blue-chip index now is not far off the 6,338.10 level it closed at last Thursday before the outcome of the vote and is back in positive territory for 2016 to date.

The FTSE 250 was up 1.7% at 15,764.33, but the mid-cap index remains well below the 17,333.51 it closed at on Thursday. Analysts said the FTSE 250 is more reflective of confidence in the UK than the FTSE 100, as a greater number of mid-cap constituents operate domestically. The AIM All-Share was up 0.9% at 695.07.

In mainland Europe, the CAC 40 index in Paris was up 2.7% and the DAX 30 in Frankfurt was up 1.9%.

Ahead of the open on Wall Street, futures pointed the Dow Jones Industrial Average up 0.6%, the S&P 500 index up 0.7%, and the Nasdaq 100 up 0.8%.

Elsewhere on the London Stock Exchange, travel stocks were declining due to concerns that a weaker pound could restrict customers from flying abroad, according to Michael Hewson, chief market analyst at CMC Markets.

A terrorist attack in Istanbul's Ataturk international airport on Wednesday, which killed at least 36 people, also did no favours for sentiment on travel stocks.

Turkey's tourism sector already had declined in recent months due to terrorist attacks and a diplomatic row with Russia. The number of foreign visitors decreased by 35% in May, the latest in a string of steep monthly falls.

TUI Group was the biggest faller in the FTSE 100, down 3.8%, British Airways-owner International Consolidated Airlines Group was down 2.9%, and easyJet was down 1.4%.

Mobile phones and electronics retailer Dixons Carphone reported lower profit in its recently ended financial year due to non-recurring costs of restructuring its store portfolio, declaring it will remain "the leader in the UK market" despite expected volatility arising from the Brexit vote.

The company said pretax profit in the year ended April 30 decreased to GBP263 million from GBP287 million the year before, despite revenue rising to GBP9.74 billion from GBP8.26 billion.

Headline pretax profit, which excludes non-recurring items such as acquisitions and merger costs, rose to GBP447 million from GBP381 million, in line with analyst and company expectations.

Dixons Carphone added that despite the volatility it expects to see following the EU referendum result, it expects to find opportunities for additional growth and "further consolidate our position as the leader in the UK market". The stock traded down 1.3%.

Cobham said it has poached its new chief financial officer from fellow FTSE 250 defence technology company QinetiQ Group.

Cobham said David Mellors will join as chief financial officer, the same position he currently holds at QinetiQ, no later than January 1, 2017. Prior to taking up his position at QinetiQ, Mellors was deputy CFO at Logica, the UK-based IT and management consultancy.

Cobham shares traded up 4.5%, while QinetiQ was one of the worst mid-cap performers down 3.2%.

Industrial maintenance, repair and overhauls products distributor Brammer said sales have slowed significantly and issued a profit warning for the first half, hammering its share price.

The company said sales per working day in May were down 3.0% year-on-year, with a weak performance in the UK and sluggish trading in Europe. This weakness has continued into June and underlying margins for the business have weakened as a result.

Brammer said its adjusted pretax profit for the first half of 2016 is now set to miss expectations, and it will review its trading outlook for the year as a whole, including taking measures to improve profitability and strengthen its balance sheet.

The stock traded down 56% at 63.25 pence, having reached its lowest level since April 2009 at 60.00p.

Still ahead in the economic calendar, German inflation numbers are at 1300 BST. In the US, personal spending data are at 1330 BST, while pending homes sales are at 1500 BST. The US Energy Information Administration's crude oil stocks are at 1530 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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