LONDON MARKET MIDDAY: FTSE 100 Hits High, Pound Jumps On Tory Drama

LONDON (Alliance News) - UK equities continued their bullish momentum midday Monday, with miners and housebuilders amongst the best performing sectors.

Conservative leadership candidate Andrea Leadsom is expected to make a statement at 1215 BST amid speculation that she may be poised to pull out of the race to replace David Cameron as prime minister, the Press Association reported.

If the energy minister confirms that she is planning to quit the battle, it would leave Home Secretary Theresa May as the only candidate - potentially clearing the way for her to be named Tory leader and PM as early as Monday.

Sterling leapt from USD1.2870 to a high of USD1.2993. Leadsom is due to make a statement at 1215 BST.

The FTSE 100 was up 0.8% or 55.54 points at 6,646.18. The blue-chip index touched its highest level since August earlier in the session at 6,640.82.

The FTSE 250 was up 1.8% at 16,462.96 and the AIM All-Share up 1.0% at 712.62.

In Europe, the French CAC 40 index was up 0.9% and the German DAX 30 was up 1.2%.

Ahead of the open on Wall Street, futures pointed the Dow Jones Industrial Average up 0.3%, the S&P 500 index also up 0.3% and the Nasdaq 100 up 0.5%. US earnings season is due to kick-off Monday with traditional curtain-raiser aluminium producer Alcoa.

On the London Stock Exchange, mining stocks were topping the gainers list in both the FTSE 100 and FTSE 250. Michael Hewson, chief market analyst at CMC Markets said the sector was benefiting from speculation of easier monetary policy from Japan and China, the latter due to weaker-than-expected inflation data at the weekend which pointed to more flexibility in monetary policy.

Data from the National Bureau of Statistics showed Chinese consumer prices rose 1.9% year-on-year in June. This slowed from the 2.0% growth in May and remains below the 3.0% target set by the government, but was a touch ahead of the 1.8% consensus forecast.

Anglo American was the best performer in the FTSE 100, up 5.8%, joined by Glencore, up 4.6%. Among mid-caps, Hochschild Mining was up 9.5% and KAZ Minerals up 6.0%.

The miners joined housebuilders and banks which have been rallying from their post-referendum lows. Joshua Mahony, market analyst at IG, said the gains in the these two sectors demonstrate the appetite for risk in the market.

"There is no doubt that the housebuilders and banks are currently a risky play, given the severity of their recent devaluation. However, in days when the market is in the green, the performance of these sectors will reflect how far reaching that optimism really is," the analyst said.

Dixons Carphone reversed earlier losses to trade up 1.2%, having been cut to Equal Weight from Overweight by Barclays. A forecast recession in the UK following the Brexit vote will hit demand for big-ticket items at Dixons Carphones and temper its market share gains, said Barclays.

Household and personal care products company McBride was up 7.5%, after it said adjusted operating profit for its full financial year will be slightly ahead of its previous expectations.

McBride said its financial year, which ended on June 30, benefited from better-than-anticipated progress on cost-saving initiatives, including from its UK business restructuring project and from purchasing-driven savings resulting from reductions in product ranges. However, revenue fell in the year as McBride reduced the number of small customers it serves and due to pricing pressures.

Collagen Solutions said it has seen a "positive start" to its new financial year, as it reported a narrowed pretax loss for its year just ended.

Collagen Solutions develops and manufactures collagen components for use in regenerative medicine, medical devices and in vitro diagnostics.

For its financial year to end-March the company reported a pretax loss of GBP866,290, narrowed from a pretax loss of GBP1.1 million the previous year, as a rise in revenue to GBP3.1 million from GBP972,846 was partly offset by higher administrative costs.

Collagen Solutions said it had seen a very strong contribution to revenue growth from Southern Lights Biomaterials, which it acquired in December 2014. The stock was up 23%.

Ortac Resources welcomed a decision in its favour from the District Environmental Office in Ziar nad Hronom in Slovakia. The news sent shares in Ortac were up 24%.

A regional court has dismissed an appeal from a local non-governmental organisation and local municipality lodged against the District Environmental Office in relation to the approval of an underground mining application Ortac submitted in 2014.

Further judicial proceedings in respect to a decision made by the Central Mining Bureau for the same application are currently underway, Ortac said, and a decision is expected in due course.

Still ahead in the economic calendar is US labor market conditions index at 1500 BST.

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

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