LONDON MARKET CLOSE: Europe shakes off looming virus restrictions

(Alliance News) - Stocks in Europe benefited from a relief rally on Tuesday as recent virus-driven selling pressure eased up, even though with the Omicron situation continues to look troubling with countries mulling fresh restrictions.

The FTSE 100 index closed up 99.38 points, or 1.4%, at 7,297.41. The FTSE 250 ended up 1.2%, or 270.42 points, at22,820.30, and the AIM All-Share closed up 14.72 points, or 1.3%, at 1,173.57.

The Cboe UK 100 ended up 1.3% at 723.32, the Cboe UK 250 closed up 1.3% at 20,215.61, and the Cboe Small Companies ended up 0.6% at 14,830.23.

In European equities on Tuesday, the CAC 40 in Paris ended up 1.4%, while the DAX 40 in Frankfurt also ended up 1.4%.

"Crude oil and stock markets managed to rebound from their earlier sharp falls at the start of the week, and that momentum carried forward to today's session for European indices," said Fawad Razaqzada, market analyst at ThinkMarkets.

Brent oil was quoted at USD73.48 a barrel at the London equities close Tuesday, recovering from USD69.78 late Monday. This bolstered oil majors such as BP, ending up 2.6%.

British Airways parent International Consolidated Airlines shook off higher fuel prices to end up 6.1%, topping the FTSE 100 as the stock benefited from Tuesday's relief rally.

However, Europe's move higher is unlikely to mark the start of a Santa rally, said Razaqzada.

"I expect the markets to remain choppy and won't be surprised to see indices turn lower again. Santa rally hasn't materialised so far. There's still time, but I can't see any fundamental reason why people will all of a sudden start buying stocks in a meaningful way, without the markets first staging a deeper correction," he said.

The virus situation remains grim, with countries mulling further lockdown measures to stem the spread of the Omicron variant.

Paris has already cancelled its new year celebrations, and Germany is expected to roll out tight restrictions on private parties and to close nightclubs. Spain's Catalonia region is considering a clampdown as well, while Morocco has announced a blanket ban on New Year's Eve celebrations.

The Netherlands has already imposed a Christmas lockdown, with EU officials warning that the Omicron variant could be dominant in Europe by mid-January.

In the UK, new restrictions are unlikely to stop Christmas celebrations this week but Prime Minister Boris Johnson has urged caution amid speculation further measures will be needed to halt the spread of the Omicron variant.

After a special two-hour meeting of the Cabinet on Monday, the prime minister said the government needs to be clearer about the rate of hospital admissions associated with Omicron, and the effectiveness of vaccines against it, before imposing additional measures in England to prevent the spread of the virus. But Johnson said the government will "reserve the possibility" of implementing new restrictions, causing opposition politicians to accuse him of lacking a clear plan.

But in some good news for businesses, UK Chancellor Rishi Sunak on Tuesday offered a GBP1 billion support package to businesses hit by Covid restrictions amid concerns over the "eye-wateringly high" transmission of the Omicron variant.

The chancellor has come forward with additional help for the hospitality and leisure sectors in England following days of urgent lobbying from MPs, firms and industry officials.

Sterling found some support on Tuesday. The pound was quoted at USD1.3248 at the London equities close, compared to USD1.3221 at the close on Monday.

The euro stood at USD1.1267 at the European equities close Tuesday, down from USD1.1299 at the same time on Monday after figures showed Germany's consumer confidence has fallen as 2021 draws to a close, with a rise in Covid-19 cases knocking sentiment.

GfK consumer sentiment tracker will fall to minus 6.8 points in January, according to estimates, from minus 1.8 points in December. The figure would represent the worst monthly tally since June's minus 6.9 points.

"Consumer confidence in Germany decreased noticeably in December. Both economic and income expectations have fallen significantly, along with the propensity to buy," GfK commented.

The safe haven Japanese yen eased back amid Tuesday's risk-on mood. Against the yen, the dollar was trading at JPY114.14, up compared to JPY113.41 late Monday.

Gold suffered a similar fate, falling to USD1,785.40 an ounce at the London equities close Tuesday from USD1,793.80 at the close on Monday.

Stocks in New York were higher at the London equities close, with the DJIA up 1.1%, the S&P 500 index up 0.8%, and the Nasdaq Composite up 1.0%.

Back in London, Carnival extended gains to end the best performer in the FTSE 250, shares up 9.8%. The cruise operator was benefiting from Tuesday's relief rally, as well as results on Monday which showed a widened fourth quarter loss but a better than expected monthly average cash burn rate.

Anglo-German tour operator Tui ended up 6.6%, Wagamama dining chain owner Restaurant Group rose 6.3% and budget airline easyJet rallied 5.3%.

Elsewhere, Foxtons rose 2.0% despite Rank Group poaching its new finance chief from the estate agent.

Maidenhead-based Rank Group said it has appointed Richard Harris as chief financial officer and board director, with effect from May 1. Harris will join Rank from estate agent Foxtons, where he has been CFO since June 2019.

In response, Foxtons said it has promoted Chris Hough to CFO and executive director. Hough currently is director of finance and company secretary, having joined Foxtons in May 2019. Harris will remain with Foxtons until April to ensure an orderly handover to Hough, Foxtons said.

Rank Group shares rose 3.1%.

Shares in AIM-listed Itaconix jumped 37% after it announced the resumption of production at a plant in the US north east, following previous interruptions due to water damage.

"The company was successful with interim measures to resume production in the middle of November, with permanent repairs scheduled to be completed in the coming weeks," Itaconix said.

Wednesday's economic calendar has UK GDP at 0700 GMT and US GDP at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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