Taylor Wimpey Share News (TW.)

LONDON (Alliance News) - UK stocks are trading higher midday Thursday and US equities are called to open firm, spurred by a rebound in Chinese stocks following recent sessions of heavy selling.

The Shanghai Composite index has lost over 32% of its value since hitting its highest level in seven and a half years in the middle of June ahead of Thursday's session. Regulators in China and the People's Bank of China have put measures in place to try to curb the decline in the stocks but have, for the large part, been unsuccessful.

Nevertheless, on Thursday, the Shanghai Composite closed up 5.8%, its largest single-day percentage gain since March 2009, after dropping more than 3% at the opening bell, as authorities unveiled fresh support measures, and official data showed China's consumer inflation ticked slightly higher in June.

China's securities regulator banned senior management and investors who own stakes in businesses exceeding 5% from selling their shares for next six months.

In addition, China's central bank said it would provide sufficient liquidity to China Securities Finance Corp, the state-backed margin finance company, via various channels. The China Banking Regulatory Commission said it would encourage banks to support companies' share buybacks by offering them collateralised loans.

China's consumer inflation edged up slightly in June, while producer prices remained entrenched in deflation for a 40th consecutive month. The consumer price index rose to 1.4% year-over-year, up from 1.2% in May and exceeding forecasts for a 1.3% rise. Producer prices contracted 4.8% from a year earlier, versus forecasts for a fall of 4.6%, which would have been unchanged.

Nevertheless, Nigel Green, the founder and CEO of deVere Group is still concerned about the contagion effects from the sharp fall in stock prices in China.

"With the Chinese stock market losing a third of its value since mid June, which is about equivalent to the UK's entire economic output last year, or in other terms the GDP of Greece every two days for the last 10 days, this has all the makings of morphing into a major financial crisis," Green says.

"Despite few foreign investors having much exposure to the Chinese stock markets, the meltdown matters. Indeed, it is hugely significant because it will send shock waves throughout global capital markets, not least because China is the world's second largest economy and one of the largest consumers of commodities and other goods sold by other countries," he adds.

Partially cheered by Thursday's gains in Shanghai and Hong Kong, the FTSE 100 trades up 1.1% in London at 6,560.29, the FTSE 250 is up 0.7% at 17,235.24, and the AIM All-Share index is up 0.1% at 744.78.

In Europe, the CAC 40 in Paris is up 1.8% and the DAX 30 in Frankfurt is up 1.7%.

Futures point to a higher open in New York, with the DJIA pointed up 0.8%, the S&P 500 up 1.0% and the Nasdaq 100 up 1.1%.

Earnings season in the US kicked off on Wednesday with traditional curtain-raiser Alcoa. The aluminium producer said after US stock markets closed that its second quarter profit rose 1.4% from last year, as sales increased 1% due to organic growth in aerospace, automotive and alumina businesses. The company's quarterly earnings per share, excluding items, came in below analysts' expectations, but its quarterly sales beat analysts' forecast.

Second quarter earnings are expected from PepsiCo on Thursday, while Walgreens Boots Alliance reports third quarter results.

Investors also are awaiting a new reform proposal from Greece to avoid ejection from the eurozone. Greek Prime Minister Alexis Tsipras promised to implement pension and tax reforms in a bid to win fresh aid from skeptical creditors. He told the European parliament on Wednesday that he would submit a detailed reform plan to the eurozone on Thursday aimed at resolving the country's debt crisis.

"The Greek government will [Thursday] file new concrete proposals, credible reforms, for a fair and viable solution," Tsipras told the European Parliament in Strasbourg, France.

On Wednesday, the cash-strapped country requested a new bailout package from the eurozone bailout fund, the European Stability Mechanism, one week after Greece's previous aid package was left to expire because Athens and its creditors were unable to agree on required economic reforms.

On the London Stock Exchange, Associated British Foods is up 5.2%. The company, which owns Primark and British Sugar and which operates an agriculture and consumer goods arm, said its results for the full year will be harder hit than expected by the weak euro. It also said revenue in the first 40 weeks was flat at actual rates amid continued tough trading in its sugar business, offset by a still-buoyant performance by discount fashion retailer Primark.

Primark sales rose by 9% in the period, and by 13% in constant currencies, driven by an 8% increase in selling space and high sales densities in stores it has opened in the past year. Trading in its grocery and agriculture businesses also remains on track, but AB Foods said the woes in its British Sugar arm continue to bite.

"In our view, financial years 2015 and 2016 are transition years for AB Foods although we expect earnings will rebound strongly by financial year 2017 as the EU sugar industry consolidates and sugar profits recover," says Liberum analyst Robert Waldschmidt.

Barratt Developments is up 2.6% after the housebuilder said it expects to post a 45% rise in annual profit for the year to the end of June, as it sold more houses at higher prices over the period. Barratt said it expects total completions for the year to the end of June to be up by 11% to 16,447 units from 14,838 a year earlier, on the back of strong consumer demand and increased site numbers.

Barratt Chief Executive David Thomas was quoted by Reuters as saying the negative market reaction on Wednesday to the UK Budget's restriction on buy-to-let tax deductions was "very overdone".

Fellow blue-chip housebuilders Persimmon, up 3.0%, and Taylor Wimpey, up 3.0%, also trade higher.

Next is the biggest of a small number of decliners in the FTSE 100, trading down 2.1% after going ex-dividend.

SuperGroup trades up 6.0% after it said its pretax profit rose in its 2015 financial year on the back of robust retail sales over the course of the year and said it has signed a joint venture deal to enter the Chinese market as sales in the first quarter rose sharply against weak comparables.

The Superdry brand owner said its pretax profit for the year to April 25 was GBP59.5 million, up from GBP45.2 million last year when the group was hit by GBP16.8 million in exceptional charges. Revenue increased to GBP486.6 million from GBP430.9 million, and the group's gross margin improved to 60.9% from 59.7%.

On AIM, mobile marketing and digital entertainment services company InternetQ said it has secured a EUR17 million fundraising for its Akazoo music streaming service. It said the investment in the business has been made by a consortium of investors, led by Toscafund Asset Management and Penta Capital. The company's shares trade up 8.5%.

Eurasia Mining said it has issued just under 12.1 million new shares in the company at a price of 0.63 pence per share after Darwin Strategic exercised all of its remaining warrants. That means the company received around GBP76,230 for the warrants, and Darwin no longer holds any warrants in Eurasia following the conversion. Eurasia trades down 8.3% at 1.0775p.

Still ahead in the economic calendar, US initial and continuing jobless claims are at 1330 BST, and the EIA natural gas storage figures are at 1530 BST.

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

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