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(Alliance News) -Â London stocks posted cautious gains on Wednesday ahead of critical talks between the UK and EU over post-Brexit trade.
The FTSE 100 index closed up 5.47 points, or 0.1%, at 6,564.29. The FTSE 250 ended up 13.40 points, or 0.1%, at 19,883.89, and the AIM All-Share closed up 3.37 points, or 0.3%, at 1,077.85.
The Cboe UK 100 ended up 0.1% at 654.92, the Cboe UK 250 closed up 0.4% at 17,239.60, and the Cboe Small Companies ended down 0.1% at 11,494.00.
In European equities on Wednesday, the CAC 40 in Paris ended down 0.3%, while the DAX 30 in Frankfurt rose 0.5%.
"Steady gains being seen once again on Wednesday, as we continue to see progress on a variety of downside risk factors going into year-end," said Craig Erlam, senior market analyst at Oanda.
Erlam pointed towards stimulus talks in the US and the thorny issue of Brexit as the UK and EU prepare for crunch talks Wednesday evening.
"Let's just hope that compromise becomes a common theme this month. OPEC+ led the way last week in agreeing terms for gradually paring back emergency production cuts implemented earlier this year. This week we may see some significant movement in the Brexit negotiations as well, as Boris Johnson travels to Brussels for dinner with Ursula von der Leyen," said Erlam.
The UK prime minister will fly to Brussels for dinner with European Commission President Ursula von der Leyen on Wednesday, with time running out to reach a trade agreement before the current transitional arrangements expire at the end of the month.
At Prime Minister's Questions, Boris Johnson set out the main problems he has with the EU's position, although he said "a good deal is still there to be done".
Ahead of the Brussels dinner there has been pessimistic briefing from both sides, with UK sources acknowledging "an agreement may not be possible" and the EU's negotiator, Michel Barnier, warning the bloc's foreign ministers that a no-deal scenario is more likely than an agreement.
The pound was quoted at USD1.3382 at the London equities close Wednesday, up compared to USD1.3360 at the close on Tuesday. The euro eased to USD1.2080 at the European equities close from USD1.2111 at the same time on Tuesday.
Some progress appeared to be made in the US over stimulus talks. The White House unveiled a USD916 billion stimulus proposal on Tuesday in a final dash to break a months-long logjam over new aid for the coronavirus-stricken US economy before President Donald Trump leaves office in January.
The new proposal is slightly larger than a USD908 billion compromise unveiled by a bipartisan group of senators last week.
"Bipartisan talks are the best hope for a bipartisan solution," Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement.
But "the President's proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from USD180 billion to USD40 billion," the officials continued. "That is unacceptable."
Chris Beauchamp, chief market analyst at IG, said: "The usual 'Santa rally' is now just days away, and if stock markets can hang on for a while longer the final tailwind of the year may kick in. Usually the second half of December is the stronger part, so if we can get some judiciously-timed stimulus headlines investors may yet be deemed to be on the 'nice' list and be granted a pre-Christmas gift as a reward for enduring a very tough year."
Stocks in New York were lower at the London equities close, with the Dow Jones, S&P 500 index and Nasdaq Composite all down 0.3%.
Brent oil was quoted at USD48.72 a barrel at the London equities close Wednesday, softening from USD48.98 late Tuesday.
Safe haven assets fell back on Wednesday amid stock market gains. Gold was quoted at USD1,849.10 an ounce at the London equities close Wednesday against USD1,869.75 at the close on Tuesday. Against the yen, the dollar was trading at JPY104.27 compared to JPY104.14 late Tuesday.
Gold miner Fresnillo tracked the price of gold lower, ending 1.8% lower in London on Wednesday. Peer Polymetal International shed 2.4%.
Towards the top of the FTSE 100 was National Grid, closing up 3.1% after Citigroup raised the power lines operator to Buy from Neutral. On Tuesday, Ofgem said that it will not be cutting the amount energy networks can give to shareholders by as much as originally planned.
Another stock benefiting from a ratings upgrade was Taylor Wimpey, rising 1.7% after Deutsche Bank boosted the housebuilder to Buy from Hold.
In the FTSE 250, Howden Joinery rose 4.5% after the kitchens and joinery products company said it is now expecting its annual pretax profit to exceed the top end of current analyst forecasts by "around 10%".
Howden said that since its November announcement, trading has stayed strong with revenue from Howdens UK depots for November 1 to November 28 up 19% year-on-year and 17% on a same depot basis.
For the year to date, total UK revenue was 5.1% lower year-on-year.
The company said its gross margin guidance remains unchanged and with its "continued recent strong trading performance". Howden Joinery is now expecting its pretax profit for its financial year ending December 2020 to be around 10% above the top end of current analyst forecasts.
Elsewhere in London, Stagecoach shares rose 6.4% as it posted a drop in interim profit but maintained positive on its long-term outlook.
The public transport provider posted a GBP4.5 million pretax profit for the six months ended October 31, a fraction of the previous year's GP65.9 million profit as revenue almost halved to GBP454.6 million from GP800.2 million.
"As we emerge from the pandemic, we anticipate strong support from government in pursuing our shared objective to drive modal shift from car to public transport. That, combined with the evidence of a continuing propensity for travel, further contracts wins in London and the potential for international diversification, leaves us positive on the long-term outlook for the group," said Stagecoach.
The UK corporate calendar on Thursday has half-year results from packaging firm DS Smith and House of Fraser owner Frasers Group. Anglo-German tour operator Tui and pub operator Marston's release full-year results, and online grocer Ocado puts out a trading statement.
In the economic calendar for Thursday there is UK GDP at 0700 GMT and Irish inflation at 1100 GMT, with US inflation and continuing jobless claims both at 1330 GMT.
The key event on Thursday is a monetary policy decision from the European Central Bank at 1245 GMT. This will be followed by a press conference with President Christine Lagarde at 1330 GMT.
Expectations are high going into the ECB's last meeting of 2020, after Lagarde at the bank's last meeting, in late October, said the ECB would "recalibrate" its instruments to help support the euro area economy.
The central bank is expected to extend its pandemic bond-buying programme and top it up by EUR500 billion.
By Lucy Heming;Â lucyheming@alliancenews.com
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