(Alliance News) - London's FTSE 100 racked up only minor gains on Tuesday, lagging behind the rest of Europe and a good start in New York as the pound advanced to a one-month high and GVC Holdings shares tumbled on a probe from the UK's tax body.
However, the general mood was upbeat after EU leaders finally sealed the deal on a EUR750 billion rescue package.
The FTSE 100 index closed up 8.21 points, or 0.1%, at 6,269.73. The FTSE 250 ended up 115.98 points, or 0.7%, at 17,501.83, and the AIM All-Share closed up 6.33 points, or 0.7%, at 892.44.
The Cboe UK 100 ended up 0.1% at 624.57, the Cboe UK 250 closed up 0.9% at 14,886.56, and the Cboe Small Companies ended up 0.8% at 9,214.80.
The FTSE 100 lagged counterparts in mainland Europe on Tuesday as the pound continued to strengthen.
The pound was quoted at USD1.2736 at the London equities close Tuesday, up compared to USD1.2644 at the close on Monday and trading around its best levels in over a month.
"Excited for Mike Pompeo's arrival in London, and the potential US-UK trade talks that might follow, the pound climbed 0.4% against the dollar and 0.1% against the euro," said Connor Campbell at Spreadex.
Visiting US Secretary of State Mike Pompeo on Tuesday met Prime Minister Boris Johnson in a bid to pull Britain ever closer in Washington's diplomatic tug-of-war with China.
Pompeo's last visit to London in January came just days after Johnson ignored Washington's warnings and allowed China's tech giant Huawei to help roll out Britain's 5G network. It was a frosty affair that saw Pompeo accuse Britain of endangering Western intelligence-sharing by putting China at the heart of its next-generation data system.
However, Johnson has now reversed his stance and has ordered UK mobile providers to stop buying 5G equipment from Huawei starting next year and remove existing gear by 2027.
Equities in mainland Europe fared better than London on Tuesday, particularly German markets. The CAC 40 in Paris ended up 0.2%, while the DAX 30 in Frankfurt surged 1.0%.
The gains came after EU leaders sealed the deal on a EUR750 billion rescue package, after four days and four nights of wrangling, that will consist of loans and grants for the hardest-hit member states.
Overall, the deal will dole out EUR390 billion in the form of grants to pandemic-hit countries. That was lower than an original EUR500 billion proposal made by France and Germany. Another EUR360 billion was to be disbursed in loans, repayable by the member state.
"Outperformance amongst mainland European stocks serve to highlight the perceived risk that had been baked in after days of failed negotiations," commented Joshua Mahony, senior market analyst at IG.
The euro stood at USD1.1491 at the European equities close Tuesday, up against USD1.1441 at the same time on Monday.
Against the yen, the dollar was trading at JPY106.85, down compared to JPY107.24 late Monday.
Stocks in New York were mostly higher at the London equities close on Tuesday, with the Dow Jones up 1.2%, the S&P 500 index up 0.6%, and the Nasdaq Composite down 0.2% after hitting a record closing high on Monday.
Leading the fallers in the FTSE 100 was GVC Holdings, shedding 12% on Tuesday after saying UK HM Revenue & Customs has expanded its investigation launched in November in relation to the company's former Turkish-facing online gambling business, which was sold in December 2017.
The gambling company which owns the Ladbrokes and Coral betting chains said at the time the probe was launched, it believed the investigation was concerned with a number of former third-party suppliers and the processing of payments for online gambling in Turkey.
However, on Tuesday, GVC said it was surprised to learn that the UK tax authority is now examining "potential corporate offending" by an unidentified entity - or entities - within the GVC group, providing no further information except making reference to the section 7 Bribery Act 2010.
AstraZeneca fell 2.9% after rising 1.5% on Monday on encouraging interim results from a trial of its potential Covid-19 vaccine, being developed alongside Oxford University.
BHP fell 2.6% after the miner said annual petroleum production was marginally short of guidance, with lower gas demand due to Covid-19, but it met its targets for iron ore and metallurgical coal among others.
As the company had to temporarily suspend operations at Antamina and Cerrejon during the year, production for both was below guidance although the two operations are now ramping back up.
Petroleum production for its financial year ended June 30 was 109 million barrels of oil equivalent, a 10% drop from 2019. Guidance was for the bottom end of between 110 million and 116 million barrels of oil equivalent.
Brent oil rose to USD44.62 a barrel at the London equities close Tuesday from USD43.00 late Monday.
The risk-on mood benefited oil on Tuesday.
"Oil is tentatively breaking out of its tight trading range, but still seems to lack a strong enough catalyst for WTI crude to break above the USD45 level. Positive developments on the vaccine front have provided some optimism that crude demand will come closer to pre-pandemic levels next year. Phase III trials are only getting started, so traders should not expect any immediate updates," said Edward Moya at Oanda.
BP shares advanced 4.2% on Tuesday, tracking the price of oil higher, while Royal Dutch Shell 'A' and 'B' shares ended up 2.9% and 2.8% respectively.
Gold was quoted at USD1,839.86 an ounce at the London equities close Tuesday, up against USD1,816.37 at the close on Monday.
Elsewhere in London, Ted Baker rose 14%. The upmarket fashion retailer reported a sharp drop in revenue, but said that trading has been "resilient" and ahead of its base-case estimates.
For the 11 weeks to July 18, total retail revenue fell 55% year-on-year to GBP60.9 million, with online revenue up 35% to GBP35.2 million and retail store revenue down 79% to GBP15.8 million.
The company attributed the sharp drop in store revenue to closures globally, but noted the decline was not as bad as the 83% predicted in the company's base-case revenue scenario after the onset of the Covid-19 pandemic. Like-for-like store sales were down 52% in the 11 weeks versus last year.
In Wednesday's corporate calendar, there are full-year results from transport operator Stagecoach and half-year production from miners Fresnillo and Antofagasta. Soft drinks maker Britvic puts out third quarter results.
Stock markets in Japan will be closed on Wednesday for Marine Day, though a manufacturing PMI is due out at 0130 BST.
By Lucy Heming; lucyheming@alliancenews.com
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