(Alliance News) -Â The FTSE 100 surged at the start of trading on Wednesday, racing ahead of European counterparts and breaking away from a slump on Wall Street overnight, with the index's dollar earners boosted by a Brexit-stricken pound.
The FTSE 100 index was up 46.35 points, or 0.8%, at 5,976.65 early Wednesday. The mid-cap FTSE 250 index was down 42.08 points, or 0.2%, at 17,583.10. The AIM All-Share index was down 0.2% at 950.49.
The Cboe UK 100 index was up 0.8% at 594.74. The Cboe 250 was down 0.4% at 15,022.85, and the Cboe Small Companies up 0.1% at 9,426.76.
Helping the internationally-exposed FTSE 100 outperform in early trade was the pound, which continued to be pummelled by Brexit fears.
Controversial legislation which would override elements of UK Prime Minister Boris Johnson's Brexit deal with Brussels and breach international law will be published on Wednesday.
Downing Street had insisted changes in the Internal Market Bill were simply "limited clarifications" to protect the Northern Ireland peace process if they failed to secure a free trade deal with the EU. But Northern Ireland Secretary Brandon Lewis provoked a furious reaction when he confirmed to members of Parliament on Tuesday that the legislation would breach international law in a "very specific and limited way".
It followed the shock announcement that the head of the government Legal Department, Jonathan Jones, had become the latest senior civil servant to quit his post. No reason was given for his resignation, but the Financial Times reported that he was "very unhappy" with the proposed changes to the Withdrawal Agreement.
Meanwhile, the latest round of talks on a post-Brexit trade deal continue in London between EU chief negotiator Michel Barnier and the UK's Lord Frost.
Fiona Cincotta at City Index commented: "There is a good chance that the pound could extend losses now as we head towards the October 15th deadline as the reality of a no-trade-deal Brexit starts to hit home. Up until now there had been an assumption that the EU and the UK would pull the cat out of the bag and agree a deal at the last minute. Any tampering with the Brexit divorce bill would means the chances of a trade deal are significantly lower."
Sterling was quoted at USD1.2942 early Wednesday, lower than USD1.3030 at the London equities close on Tuesday. A week ago, the pound was trading around the USD1.34 mark.
In mainland Europe, the CAC 40 in Paris was up 0.1% while the DAX 30 in Frankfurt was 0.3% higher early Wednesday.
The euro traded at USD1.1772 early Wednesday, down from USD1.1796 late Tuesday. Against the yen, the dollar was unchanged at JPY105.94.
Gold was priced at USD1,927.57 an ounce early Wednesday, slightly higher than USD1,926.32 on Tuesday. Brent oil was trading at USD39.56 a barrel early Wednesday, flat on USD39.54 late Tuesday.
On Wall Street overnight, the Dow Jones Industrial Average closed down 2.3%, the S&P 500 index down 2.8%, and the Nasdaq Composite down 4.1%.
Asian stocks on Wednesday followed the tone set by the US. The Japanese Nikkei 225 index ended down 1.0%.
In China, the Shanghai Composite closed down 1.9%, while the Hang Seng index in Hong Kong is down 1.0% in late trade.
Chinese inflation moderated in August, data showed overnight, as a slowdown in the surging price of pork tempered food costs.
The consumer price index hit 2.4%, in line with forecasts and below the previous month's reading, as pork prices saw their slowest increase in a year, while analysts said the easing could also be attributed to a high base comparison.
The producer price index, which measures the cost of goods at the factory gate, fell 2.0% in August, largely in line with forecasts.
In London, AstraZeneca shares were down 1.0%. Clinical trials of one of the most advanced experimental Covid-19 vaccines, which is being developed by pharmaceutical company AstraZeneca and Oxford University, were "paused" Tuesday after a volunteer developed an unexplained illness.
A spokesperson for the AstraZeneca vaccine said in a statement Tuesday that "we voluntarily paused vaccination to allow review of safety data by an independent committee.
"This is a routine action which has to happen whenever there is a potentially unexplained illness in one of the trials, while it is investigated, ensuring we maintain the integrity of the trials."
The company said that in large trials, illnesses will sometimes happen by chance but must be reviewed independently. AstraZeneca didn't offer further details, but medical news site Stat News, which first reported the volunteer's illness, quoted a source saying it had involved a "serious adverse reaction" to the vaccine.
FTSE 250-listed Computacenter rallied 5.4% on interim profit growth and news it has agreed to buy Pivot Technology Solutions.
Revenue for the first half of 2020 rose 1.5% to GBP2.46 billion from GBP2.43 billion year-on-year, while pretax profit grew by 43% to GBP72.4 million from GBP50.8 million.
The IT services firm said significant reductions in spend from industrial customers was offset by new business within the government and financial services sector.
"As previously stated, our business has performed well this year to date and proven to be flexible in these extraordinary times," said Chief Executive Mike Norris.
"While nothing can be taken for granted, it is the board's view that, based on current business activity levels, our adjusted profit before tax for the year is unlikely to be less than GBP180 million," Norris added. "We feel it is important to give specific guidance given the broad range of market expectations concerning our likely results."
Separately, Computacenter said it has agreed to buy Toronto-listed Pivot Technology Solutions. Computacenter will pay CAD2.60 cash for each Pivot share, the deal worth CAD105.8 million - nearly USD80 million or GBP62 million - based on the firm's 40.7 million shares.
Pivot is an IT solutions provider which makes around 85% of its revenue from customers in the US and the remainder from customers in Canada.
Sanne Group rose 2.8% as it posted profit growth and upped its interim payout.
Turnover for the six months to June rose 14% to GBP86.5 million from GBP76.0 million a year ago, with pretax profit shooting up to GBP11.6 million from GBP3.8 million.
The provider of alternative asset and corporate services said the business showed "good resilience" during the first half amid unprecedented conditions.
"Whilst economic uncertainty remains around the medium and longer term impact of Covid-19 and the Brexit process, the business model is robust in that revenues are long term, margins are healthy and the resulting cash flow generation is strong," the company said.
Signs of "market progress" have been seen during the third quarter and the pipeline of new business continues to grow, the firm added, giving Sanne confidence in delivering a full-year outturn in line with its expectations.
Sanne declared an interim dividend of 4.8 pence, up 2.1% on the 4.7p payout a year ago.
By Lucy Heming;Â lucyheming@alliancenews.com
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