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(Alliance News) - Enthusiasm overnight following US President Donald Trump's discharge from hospital failed to flow through to the FTSE 100 in early trade on Tuesday, with London's blue-chip index lagging peers in Europe.

However, the FTSE 250 started Tuesday's session in the green as shares in Watches of Switzerland surged 20%.

The blue-chip FTSE 100 index was down 11.00 points, or 0.2%, at 5,931.94 early Tuesday. The mid-cap FTSE 250 index was up 27.30 points, or 0.2%, at 17,610.39. The AIM All-Share index was flat at 973.51.

The Cboe UK 100 index was down 0.3% at 589.83. The Cboe 250 was up 0.3% at 14,942.47, and the Cboe Small Companies up 0.1% at 9,381.95.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.2% early Tuesday.

"Markets appeared to have taken most heart from the improving health of President Trump...Investors appeared to conclude that this might improve the odds of Congress coming together to pass a further fiscal stimulus bill ahead of the election," commented Daiwa Capital Markets.

Trump on Monday returned to the White House following a three-day stay at a hospital where he was treated for the coronavirus, saying on Twitter he was "feeling really good."

Trump, wearing a mask, was taken by helicopter from the Walter Reed medical centre outside Washington.

"He may not be entirely out of the woods yet," Trump's physician, Sean Conley, told reporters earlier on Monday. "But the team and I agree that all of our evaluations, and most importantly his clinical status, support the president's safe return home, where he'll be surrounded by world class medical care."

In the US on Monday, Wall Street ended sharply higher, with the Dow Jones Industrial Average ending up 1.7%, the S&P 500 up 1.8% and Nasdaq Composite closing 2.3% higher.

Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi talked again on Monday as they searched for a long-elusive agreement on additional stimulus for the pummeled US economy, a top Pelosi aide said.

The two sides have been negotiating for weeks over a follow-up package to the USD2.2 trillion CARES Act passed as the coronavirus pandemic erupted earlier this year.

Trump has called for a deal but the parties remain far apart on the bottom line. The most recent Democratic proposal would cost USD2.2 trillion, while the White House wants to spend USD1.6 trillion.

Sterling was quoted at USD1.2982 early Tuesday, higher than USD1.2968 at the London equities close on Monday.

The euro traded at USD1.1788 early Tuesday, flat on USD1.1787 late Monday. Against the yen, the dollar was unchanged at JPY105.67.

In Asia on Monday, the Japanese Nikkei 225 index ended up 0.5%. Financial markets in China are closed to commemorate 'Golden Week', though the Hang Seng index in Hong Kong was up 0.8% on Tuesday.

In London, Rentokil Initial was at the bottom of the FTSE 100 after Goldman Sachs cut the pest control and hygiene firm to Neutral from Buy. Shares were down 2.8%.

Surging to the top of the FTSE 250 was Watches of Switzerland, jumping 20% after upgrading guidance.

Revenue for the first 10 weeks of the second quarter amounted to GBP202.7 million, up 20% at constant currency and 18% on a reported basis. The second quarter ends on October 25.

The UK performance continues to be driven by "strong domestic sales" offsetting lower tourist and airport business, while momentum in the US has accelerated further with an "exceptionally strong" performance in the quarter to date.

For the full-year, the luxury retailer bumped up its revenue guidance to a range of GBP880.0 million to GBP910.0 million from a range of GBP840.0 to GBP860.0 million announced previously. Its earnings before interest, tax, depreciation, and amortisation margin is seen up around 1.0% to 1.5% versus last year, after being guided flat.

Ferrexpo fell 3.5% as it reported a sequential decline in third quarter pellet production. Output was down 12% to 2.5 million tonnes in the third quarter, versus 2.9 million tonnes in the second quarter.

The reduced volume was due to planned pelletiser maintenance in early September.

"The company's additional concentrator section was completed in 3Q 2020, with commissioning and ramp up of this additional processing capacity to progress in 4Q 2020," added Ferrexpo.

Separately, Ferrexpo said that a restriction covering just over 50% of shares in Ferrexpo Poltava Mining remains after a Ukrainian court dismissed the firm's appeal.

"The restriction does not affect ownership of the shares in FPM, but prohibits their transfer. Furthermore, Ferrexpo AG has no intention, and never has had any intention, to transfer its shareholding in FPM. Ferrexpo's operations remain unaffected and continue as normal," Ferrexpo stressed.

The FTSE 250 constituent is considering further legal action against the restriction.

Premier Oil shares rose 14% after agreeing an all-share merger with Harbour Energy's UK operating company, Chrysaor.

Premier will merge with Chrysaor through a reverse takeover, retaining a London listing.

Premier stakeholders are expected to own up to 23% of the combined group - comprising Premier shareholders owning up to 5.45% and existing creditors holding the balance - and Chrysaor shareholders owning at least 77%.

"There is significant industrial, commercial and financial logic to creating an independent oil and gas company of this size with a leading position in the UK North Sea. The transaction will also provide the combined group with a solid foundation from which to pursue a fully funded international growth strategy," said Premier Chief Executive Tony Durrant.

Restaurant Group was up 6.3% as it reported a widened interim loss, though said post-lockdown trade has been encouraging.

Revenue for the half-year to June 28 was GBP227.2 million, down sharply on GBP515.9 million a year ago. Its pretax loss widened to GBP234.7 million from GBP87.7 million.

The casual dining chain owner said its results reflect the impact of the UK's lockdown and significant exceptional restructuring costs.

Restaurant Group noted, though, that its performance since reopening has been "very encouraging". For the 11 weeks to September 20, Wagamama like-for-like sales have grown 11% and Leisure sales were up 4%.

Gold was quoted at USD1,911.12 an ounce early Tuesday, lower than USD1,914.70 on Monday. Brent oil was trading at USD41.65 a barrel, soft against USD41.66 late Monday.

In the economic calendar on Tuesday, there is a UK construction PMI at 0930 BST.

By Lucy Heming; lucyheming@alliancenews.com

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