(Alliance News) - Stocks in London were higher at midday on Monday on hopes of a resolution in the protracted trade war between the US and China and following a positive close in Asian equity markets.
Top Chinese and US trade negotiators held "constructive" discussions over the phone on a preliminary trade deal between the two countries, China's commerce ministry said in a statement on Sunday.
US President Trump announced a "phase one" trade deal in October which has yet to be signed. Vice Premier Liu He spoke with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Saturday, and had "constructive discussion on each side's core concerns regarding the phase-one agreement", the Chinese commerce ministry said.
The two sides will "continue to maintain close communication", it added, without providing further details.
The UK large-cap index was up 8.21 points, or 0.1%, at 7,311.15. The FTSE 250 was up 75.62 points, or 0.4%, at 20,480.02, and the AIM All-Share was up 2.91 points, or 0.3% at 895.21.
The Cboe UK 100 index was up 0.2% at 12,387.62. The Cboe UK 250 was up 0.7% at 18,425.07 and the Cboe UK Small Companies was up 0.1% at 11,289.71.
"Markets are following their Asian counterparts higher this morning, as positive tones from China helped set stocks on an upward trajectory. A weekend call between Steve Mnuchin, Robert Lighthizer, and Chinese Vice Premier Liu He resulted in 'constructive talks' according to Chinese reports. With the phase one deal previously expected to be signed this week in a now cancelled summit in Santiago, there is still a belief that we are approaching a partial deal that could provide the kind of positivity that markets have already been showing amid record highs in the US," said IG Group's Josh Mahony.
The Japanese Nikkei 225 index closed 0.5% higher on Monday. In China, the Shanghai Composite ended up 0.6%, while the Hang Seng index in Hong Kong closed up 1.4%.
Stocks in New York were set for a higher open, with the DJIA was called up 0.2%, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.2%, having closed at fresh record highs on Friday. The Dow finished above the 28,000 mark for the first time on Friday.
In Paris the CAC 40 and the DAX 30 in Frankfurt were both down 0.3%.
In the FTSE 100, Aviva was the worst performer, down 4.2% after the insurer decided to retain its Singapore businesses.
Aviva said the move follows a "thorough" review of options for the Singapore business, including seeking offers for the business. Earlier on Monday, Bloomberg reported that Japan's MS&AD Insurance Group Holdings and Canada's Manulife Financial Corp were vying to buy Aviva's assets in Singapore and Vietnam, with the sale process entering its final stage.
Also on Monday, Aviva confirmed that its joint venture in China will be retained, given the scale of the market, "excellent" relationship with its partner China Oil & Food Corp and the high growth prospects.
BT Group was down 0.9% after Barclays downgraded the telecommunications firm to Underweight from Equal Weight.
The bank believes a dividend cut from BT is a possibility and that it will struggle to meet financial 2021 earnings guidance.
In the FTSE 250, Diploma was up 3.5% after the technical products supplier upped its final payout for financial 2019 after reporting a "strong double-digit growth in revenues and earnings".
The London-headquartered company, which supplies seals, filters, specialised wiring and fastners, also said its remains confident of making further progress in the current financial 2020 as moderately lower underlying growth will be offset by a strong contribution from acquisitions. Diploma posted a 15% rise in pretax profit for the year ended September 30 to GBP83.5 million from GBP72.7 million a year ago.
Diploma recommended a 15% increase in its final dividend to 20.5 pence per share, with the total annual payout up 14% to 29.0p from 25.5p last year.
Elsewhere, Consort Medical was up 43% at 1,040p after the pharmaceutical company agreed to a GBP505 million acquisition offer from Swedish peer Recipharm.
Under the offer, a unit of Recipharm will pay 1,010 pence in cash for each Consort share, representing a premium of 39% to Consort's closing stock price of 726p on Friday. The proposed deal implies an enterprise value of GBP627 million for Consort. Recipharm may reduce its acquisition consideration if any dividend or other distribution is made by the Hemel Hempstead-based company, Consort said.
The pound was quoted at USD1.2965 at midday, up from USD1.2901 at the London equities close Friday.
With just under a month to go until the UK general election, UK Prime Minister Boris Johnson pitched to cut employers' National Insurance as part of a range of tax cuts as he seeks to get the business community back on side.
In a major election pledge, the Conservative Party said a Tory government would cut business rates, launching a fundamental review at their first UK budget.
The Conservatives said they will increase the employment allowance from GBP3,000 to GBP4,000, providing a cut in National Insurance of up to GBP1,000 for more than half a million businesses.
Under the plans, the R&D tax credit rate will increase from 12% to 13%, which the Tories say will boost manufacturing and the professional, scientific and technical services sectors in particular.
"At the moment it seems like the market is pricing in a Tory victory thus investors are hoping that increased positions in UK stocks will put them in a good place to enjoy a bounce on the election result. However, a lot can change in politics in three weeks so the markets are likely to remain volatile right up to the big vote," said AJ Bell's Russ Mould.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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