LONDON (Alliance News) - UK stocks have opened higher Tuesday with UK banks amongst the biggest gainers in the FTSE 100 after they passed the Bank of England's stress tests.
The FTSE 100 index traded up 0.5% at 6,384.63 points, rebounding from its late sharp fall on Monday. The FTSE 250, which had outperformed the blue-chip index on Monday, was up only 0.2% at 17,447.20 . The AIM All-Share traded up 0.1% at 738.27.
In Europe, the French CAC 40 and the German DAX 30 were both flat.
Asian stocks closed higher, with the Nikkei 225 index ending up 1.3%, the Hang Seng in Hong Kong closing up 1.8% and the Shanghai Composite rising 0.3%. Elsewhere, the Australian benchmark S&P/ASX200 index ended up 1.9%, the Singapore STI index traded up 0.4% and the Bombay stock market was down 0.1%.
The Bank of England said the UK banking system is strong enough to continue lending in the event of a global economic downturn, although its stress tests showed that Royal Bank of Scotland Group and Standard Chartered had capital inadequacies at the end of 2014.
However, because of actions taken to raise capital since the end of 2014, the Bank of England's Prudential Regulation Authority did not require either RBS or Standard Chartered to submit revised capital plans.
The stress tests did not show capital inadequacies for Barclays, HSBC Holdings, Lloyds Banking Group, Nationwide Building Society, or Santander UK.
The stress tests, which assessed banks' capital strength at the end of 2014, considered the effect of a big slowdown in growth in China and across the globe, as well as plunging commodity prices, deflation in the eurozone and heightened volatility in financial markets.
Separately, banks were tested for their ability to withstand billions of pounds of fines for misconduct. Critically, the banks were restricted from protecting their capital levels by cutting credit supply to the UK real economy.
Barclays was up 2.8%, as was Lloyds. RBS traded up 2.3%, Standard Chartered was up 2.1% and HSBC up 1.2%.
Merlin Entertainments was up 1.0%. The theme park and attractions operator said trading has remained in line with its expectations and it is on track for the year to December 27, despite continued tough trading in its Resort Theme Parks operating division.
The FTSE 100-listed company, which runs attractions and parks ranging from Legoland to Madame Tussauds and the London Eye, said like-for-like revenue growth for its Legoland Parks division has remained robust in the 47 weeks to November 21, while its Midway Attractions business has seen growth, albeit at lower levels due to challenging markets in London and Hong Kong, which has been offset by strength elsewhere in Asia.
For the Resort Theme Parks operating arm, however, trading at Alton Towers has remained significantly weaker year-on-year, though the year-on-year declines have eased in recent weeks. This comes after the Smiler ride at the park crashed in June, injuring 16 people in total and four seriously.
In the FTSE 250, Sophos Group was down 8.0% to 261.96 pence, making it the worst performer in the index. Pentagon Lock said it sold 60 million shares in Sophos, or around a 13.3% stake, at a price of 265 pence each Tuesday, or a total of GBP159.0 million.
This was a discount to the IT security and software company' closing price Monday of 283.60 pence. Following the sale the sellers, Pentagon Lock Sarl, Pentagon Lock 7-A Sarl, Pentagon Lock US Sarl, and Pentagon Lock 6-A Sarl, hold an around 21.8% stake in Sophos.
Home Retail Group was the biggest gainer in the mid-cap index, up 7.6% after the Financial Times reported that the retail executive responsible for turning around the Garden Centre Group is understood to be preparing a bid to buy the Homebase DIY and garden centre business from Home Retail, the Financial Times reported.
Nicholas Marshall told the FT he has been looking at Homebase for the past couple of years and was holding talks with private equity companies, though no approach has yet been made to Home Retail, which also owns the Argos retail chain.
In the AIM All-Share, Sovereign Mines of Africa saw its shares plunge 66% after the company said talks with a potential partner for the redevelopment of its Mandiana project in Guinea have been suspended.
The company said the talks collapsed after approval from the potential partner's board had not been forthcoming in a timely manner.
Sovereign Mines also said it will be undertaking a capital raise which will be done at a price significantly below its current market price. It added, however, that without a capital raise, it will not be able to continue operating.
Brady was also a heavy faller, down 47% after it said late Monday that its revenue and earnings before interest, tax, depreciation and amortisation for 2015 will be "materially below market expectations" as some sales opportunities took longer than expected to be converted, and market conditions deteriorated.
The company, which provides trading and risk management services for metals, recycling energy and soft commodities, said over the last month or so market conditions for its clients have "materially deteriorated", with several major commodity trading companies reporting deteriorating conditions, issuing profit warnings and announcing cost cutting and restructuring.
Still ahead in the economic calendar, there are a raft of Markit manufacturing PMI readings from France at 0850 GMT, Germany at 0855 GMT, the eurozone at 0900 GMT, the UK at 0930 GMT, and the US at 1445 GMT. German unemployment will be released at 0855 GMT.
In the US, there is ISM manufacturing PMI at 1445 GMT, just before construction spend at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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