(Alliance News) - London stocks got off to a strong start on Friday, with the FTSE 100 poised to finish with a gain for the week despite coronavirus concerns.
The mid-cap FTSE 250 index, meanwhile, outpaced its blue-chip counterpart in early trade as Ultra Electronics shares surged by a third on M&A activity.
The FTSE 100 index was up 51.44 points, or 0.7%, at 7,019.74 early Friday. At this level, the FTSE 100 is up 0.2% on last Friday's closing price of 7,008.09, even after its 2.3% tumble on Monday.
The mid-cap FTSE 250 index was up 184.43 points, or 0.8%, at 22,861.71. The AIM All-Share index was up 0.1% at 1,229.32.
The Cboe UK 100 index was up 0.8% at 698.59. The Cboe 250 was up 0.8% at 20,546.12, and the Cboe Small Companies up 0.1% at 15,031.93.
After a wobble on Thursday, the FTSE 100 continued the week's rebound on Friday, edging above the level at which it closed last week.
Stocks across Europe tumbled at the start of the week, with investor sentiment hurt by worries over the spread of the Delta coronavirus variant, but have made an impressive recovery since. With this in mind, Friday's flash purchasing managers' index readings will be closely watched.
The eurozone composite PMI, to be released at 0900 BST, is expected to improve to 60.0 points in July from 59.5 in June, according to FXStreet.
Meanwhile, both the UK manufacturing and services PMIs - due at 0930 BST - are expected to soften, though still remain at elevated levels.
Ahead of this, data showed UK retail sales returned to growth in June as supermarkets benefited from the Euro football championship.
Retail sales by volume were up 0.5% month-on-month in June, ahead of the market forecast of 0.4%, according to FXStreet, and rebounding after a 1.3% decline in May. The largest contribution came from food stores, where volumes rose by 4.2%.
"June's retail sales have picked up again following the dip seen last month, with the main driver coming from food and drink sales, boosted by footfall fans across Britain enjoying the Euros," said Darren Morgan, ONS director of Economic Statistics.
Amid the football fever in England, non-food stores reported a fall of 1.7% in monthly sales, their first month-on-month fall since the start of the year.
"Sales are 9% above pre-virus levels, though June saw spending dip on non-essentials. We suspect this reflects a switch in consumer priorities as services reopen, and we aren't (yet) convinced that retail is the best place to look for the impact of the recent spike in Covid-19 cases," commented ING.
Sterling slipped to USD1.3740 from USD1.3754 at the London equities close on Thursday.
The euro traded at USD1.1766 early Friday, lower than USD1.1775 late Thursday. Against the yen, the dollar rose to JPY110.26 versus JPY110.08.
Financial markets in Japan were closed on Friday for Sports Day.
In China, the Shanghai Composite closed down 0.7%, while the Hang Seng index in Hong Kong was down 1.6% in late trade. The S&P/ASX 200 in Sydney closed up 0.1%.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 0.6% early Friday.
Gold was quoted at USD1,807.12 an ounce early Friday, up from USD1,806.52 late Thursday in London. Brent oil was trading at USD73.70 a barrel, up from USD72.84 late Thursday.
Bolstering the FTSE 100's climb was Vodafone, up 2.6% after the telecommunications firm reported first-quarter revenue growth, leaving it on track to meet full-year guidance.
Total revenue for the quarter to June 30 was up 5.7% to EUR11.10 billion, with service revenue rising 3.1% on a reported basis and 3.3% organically.
"I am pleased to report that we are back to service revenue growth in Europe, as well as Africa. This growth was broad-based within both Consumer and Business segments, with the vast majority of our markets contributing," said Chief Executive Nick Read.
The telecommunications firm said it is on track to deliver full-year guidance with adjusted earnings before interest, tax, depreciation and amortisation to be between EUR15.0 billion and EUR15.4 billion. This would compare to adjusted Ebitda of EUR14.39 billion in financial 2021.
NatWest rose 2.0% after agreeing to sell off a chunk of Ulster Bank assets to Permanent TSB Group Holdings, as part of its phased withdrawal from Ireland.
NatWest signed a non-binding memorandum of understanding with Permanent TSB to offload about EUR7.6 billion in assets. The package is made up of performing non-tracker mortgages, a performing micro-SME loan book, Ulster Bank's Lombard asset finance business, and 25 of its branch locations.
As part of the deal, NatWest will receive a minority non-consolidating equity stake in PTSB. The Irish financial services firm noted NatWest could end up with a 20% stake, and PTSB also will pay Edinburgh-headquartered NatWest an undisclosed additional cash consideration.
The FTSE 250 was lifted as shares in Ultra Electronics surged 33% to 3,286 pence. Ultra said it is minded to recommend a GBP35.00-per-share takeover approach from Cobham.
The aerospace and defence engineering company confirmed that on Wednesday it received the non-binding proposal in cash, noting that shareholders would also be entitled to its interim dividend of 16.2 pence announced at the start of the week, making the offer worth GBP35.16 per share.
The takeover offer, together with the interim dividend, values Ultra at around GBP2.58 billion and representing a premium of 63% to its closing price on June 24, the day prior to the start of the offer period. It also marks a 42% premium to Thursday's closing share price of GBP24.70.
"Having considered the proposal, the board has indicated to Cobham that it is at a value the board would be minded to recommend to Ultra shareholders, subject to consideration and satisfactory resolution of other terms and arrangements, including the establishment of safeguards for the interests of Ultra's stakeholder groups," said Ultra.
The latest approach follows a number of earlier proposals, Ultra noted, the first of which was made on June 29 at a price of GBP28.00. The latest offer, including the dividend, is 26% above this initial approach.
Ultra did add that there can be no certainty a firm offer will be made.
Beazley rose 4.0%. The insurer swung to a half-year pretax profit of USD167.3 million from a loss of USD13.8 million a year ago, adding it remains "committed" to a dividend payment and will consider this at year end.
Following the European readings, the US PMI is due at 1445 BST.
By Lucy Heming; lucyheming@alliancenews.com
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