XCH.L Share News (XCH)

LONDON (Alliance News) - There was a widespread rally in global equities Monday, as investors dismissed poor services sector data from the US, UK and Europe and oil prices rose as Russia said it would be open to discuss the market with members of OPEC and others.

US services data added to concerns about the US economy following the disappointing jobs report on Friday. A report from Markit showed the US service sector purchasing managers' index slipped to 55.1 in September, its lowest reading since June, from 55.6 in August. The index was expected to show a modest increase to 55.7.

Markit said that survey respondents commented on generally supportive economic conditions during September, particularly in domestic markets, but some firms noted that weaker new business growth had weighed on activity over the month.

After the Markit data, the Institute for Supply Management released a report showed growth in the US service sector in September slowed by more than expected. ISM said its non-manufacturing index dropped to 56.9 in September from 59.0 in August, although any reading above 50 still indicates growth in the service sector. Economists had expected the index to dip to 58.0.

Brett Thomas, foreign exchange dealer at OSTC FX, said that the poor manufacturing data will be further discouragement to the US Federal Reserve to raise rates in October.

"If Friday's disastrous numbers weren’t already testing [Fed Chair] Janet Yellen's resolve, today a key US indicator also missed economists forecasts (56.9 vs 58.0 expected), and whilst a figure of over 50.0 does still represent industry expansion, traders and investors will see it as another nail in the coffin for any potential lift off in October," Thomas said.

Earlier in the day, Markit said eurozone private sector growth slowed by more than initially estimated to a four-month low in September.

The final composite output index fell to 53.6 in September from 54.3 in August and below the flash score of 53.9. The services PMI came in at seven-month low of 53.7 in September, below the earlier flash estimate of 54.0 and August's 54.4.

Data from Germany, the eurozone's biggest economy, also disappointed, with the pace of growth in its service sector slowing in September and falling short of the flash estimates. The PMI score came in at 54.1, slightly below the 54.3 flash estimate and August's reading of 54.9.

Meanwhile, the UK's services sector growth slowed unexpectedly to the lowest level in nearly two-and-a-half years in September. Survey results from Markit Economics and the Chartered Institute of Procurement & Supply showed that services PMI fell to 53.3 in September from 55.6 in the previous month. Economists had expected the index to increase to 56.3.

The latest reading was the lowest since April 2013. Moreover, the average reading for the index over the third quarter as a whole came in at 55.4, which was the weakest since the second quarter of 2013.

Nevertheless, the FTSE 100 closed up 2.8% at 6,298.92 points, with all 100 stocks gaining on the day. The FTSE 250 rose 1.9% at 1.8% at 17,110.28, and the AIM All-Share index up 0.7% at 733.70.

In Europe, the French CAC 40 closed up 3.5% and the German DAX 30 up 2.7%.

US stocks were continuing their strong recent run at the London close. The Dow Jones Industrial Average was up 1.1%, the S&P 500 index was up 1.2% and the Nasdaq Composite up 0.9%. Twitter shares were up 4.9% after its board appointed Jack Dorsey, co-founder and interim chief executive officer, as permanent CEO.

On the corporate front in London, oil companies, Royal Dutch Shell 'A', up 4.5%, BP, up 4.7%, and Premier Oil, up 12%, gained following a rise in oil prices.

The commodity gained support after Russia said it was ready to meet other producers, including the Organization of the Petroleum Exporting Countries, to discuss the market, according to a report by Reuters. The report said that after being unwilling to cut output to support prices, Russia, which is one of the world's top three oil producers, is now prepared to meet OPEC and non-OPEC oil producers to discuss the market.

At the London close, Brent oil was up 3.4% on Monday to USD49.73 a barrel, while West Texas Intermediate was up 2.6% to USD46.69 a barrel.

Glencore shares continued to rebound from all-time lows and closed as the best FTSE 100 performer, up 21% to 115.00 pence. The stock has now rebounded nearly 72% since its record low of 66.67 pence set on Monday last week.

The miner and trading house released a statement noting the higher share price and increased volumes in its Hong Kong-listed shares, saying it knows of no reason for the movement. Glencore shares closed up 18% in Hong Kong.

Al Noor Hospitals Group had been one of the best FTSE 250 performers for most of the day and closed up 7.6%. The Abu Dhabi private healthcare service provider confirmed late Monday that it is in discussions with Mediclinic International Ltd regarding a possible merger of the two companies.

Mediclinic is a Johannesburg-listed private hospital group with operations in South Africa, Namibia, Switzerland and the United Arab Emirates.

Al Noor said that if the merger occurs, it would be implemented through the issue of new shares to the shareholders of Mediclinic and may be classified as a reverse takeover. Al Noor has a market capitalisation of GBP1.09 billion.

Playtech was one of the handful of mid-cap stocks to end lower, falling 3.0%. The gaming technology and financial trading company said it has received a letter from the Central Bank of Ireland opposing its proposed USD105 million deal to acquire contracts-for-difference broker Ava Trade. The company said it will be seeking clarification from the Irish central bank and will engage with it to discuss some issues raised in the letter which it believes can be addressed to the central bank's satisfaction.

Xchanging was the best FTSE AllShare performer closing up 50% to 165.91 pence. The business process outsourcing company confirmed it has received takeover offers from FTSE 100 rival Capita and US buyout house Apollo Global Management. After having a couple of bids rejected, Capita has made a final bid of 160p per share for the company, valuing it at GBP396.6 million, while Apollo has made an offer of 170p per share, or GBP421.3 million in total.

Capita said it likely would fund the deal, if it progresses, with a share placing. Capita shares closed up 2.7% to 1,245.91p.

In the economic calendar Tuesday, German factory orders are at 0700 BST and, in the UK, Halifax house prices are at 0800 BST. In the afternoon, US trade balances are at 1330 BST and the Redbook index at 1355 BST. After the close of European equity markets European Central Bank President Mario Draghi will be speaking in Frakfurt at 1800 BST.

In the UK corporate calendar, fashion retailer Ted Baker reports half-year results, while there are trading updates from bakery Greggs, postal delivery company UK Mail Group and specialty pharmaceuticals company BTG. Budget airline easyJet releases September traffic statistics, and marketing services and book publishing company St Ives publishes full-year results.

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

Copyright 2015 Alliance News Limited. All Rights Reserved.