LONDON MARKET MIDDAY: Stocks shake off global recovery worries

(Alliance News) - European stocks roared back on Friday from coronavirus-driven jitters in the previous session, with a weak UK GDP reading unable to stop the FTSE 100 advancing nearly 50 points by midday.

The FTSE 100 index was up 48.18 points, or 0.7%, at 7,078.84 midday Friday. The mid-cap FTSE 250 index was up 160.38 points, or 0.7%, at 22,813.10. The AIM All-Share index was 0.1% lower at 1,247.37.

The Cboe UK 100 index was up 0.7% at 704.55. The Cboe 250 was up 0.6% at 20,495.72, and the Cboe Small Companies up 0.2% at 15,418.98.

Stocks were rebounding at the end of a difficult week after worries over the global economic rebound in the face of the more infectious Delta coronavirus variant pounded markets on Thursday.

"Concerns over slowing global economic growth, rising Delta cases and the Fed moving towards tightening monetary policy proved too much for the markets to swallow," said Sophie Griffiths, market analyst at Oanda.

"Key technical levels were tested but not meaningfully breached," she said. "As a result, dip buyers are back in today, picking up bargains."

In mainland Europe early Friday afternoon, the CAC 40 in Paris surged 1.7% amid broad-based gains throughout the index while the DAX 30 in Frankfurt gained 0.8%.

Wall Street is also on course for a bright Friday, with the Dow Jones called up 0.4% and the S&P 500 up 0.2% but the Nasdaq Composite pointed down 0.3%

"Big tech could be under the spotlight as finance ministers and central bankers from the 20 largest economies meet in Vienna. Corporate tax reform will be at the top of the agenda, as the group looks to build on the momentum created at the G7 meeting," the Oanda analyst said.

London stocks were managing to shake off fears over economic growth peaking even after a weaker-than-expected UK gross domestic product reading.

UK GDP grew 0.8% in May from April, missing forecasts for a stronger monthly gain of 1.7%, according to FXStreet, and below April's growth of 2.0%, which itself was revised down from 2.3%. The economy remains 3.1% below its pre-virus levels, the ONS said.

ING remained upbeat despite the disappointing May figure.

"We'd still expect positive third-quarter growth of around 1.5%, especially given we're not currently looking at new restrictions – and indeed the government is planning a further relaxation on 19 July. And we'd still say the outlook beyond the summer looks reasonably good," said ING.

Sterling was trading at USD1.3801 at midday, up from USD1.3763 at the London equities close on Thursday.

The euro traded at USD1.1857 on Friday, rising from USD1.1842 late Thursday in London. Against the yen, the dollar rose to JPY109.91 versus JPY109.79.

Gold was quoted at USD1,804.29 an ounce midday Friday, higher than USD1,796.50 on Thursday. Brent oil was trading at USD74.70 a barrel, up from USD73.70 late Thursday.

Helping to support London's FTSE 100 index were ratings upgrades for Bunzl and Burberry. Bunzl was lifted to Buy from Hold at Berenberg, while Goldman Sachs upgraded trenchcoat maker Burberry to Buy from Neutral. Bunzl was up 2.8% at midday, while Burberry was up 3.0%.

Land Securities also was amongst the top performers, up 2.6%, after reporting "good progress" on rent collection.

As of Wednesday, the FTSE 100-listed property owner said that it has collected 81% of the GBP103 million net rent due by June 24. It also said it will pay a 7.0 pence per share dividend in October in its first quarterly payout for financial 2022.

At the bottom of London's blue-chip index was lockdown winner Just Eat Takeaway.com, falling 2.1% as jitters over the global economic recovery calmed.

Vectura shares surged 13% to 153.40 pence, topping the mid-cap FTSE 250 index, after agreeing to be taken over Marlboro cigarette maker Philip Morris International.

Philip Morris will pay 150p per share in cash for Vectura, a Wiltshire, England-based inhaled drug delivery devices maker. Including a 19p interim dividend, the deal values Vectura at GBP1.04 billion.

Following the PMI offer, Vectura's directors withdrew their recommendation for a GBP958 million takeover by funds managed by private equity firm Carlyle Group. PMI's offer is a 10% premium to Carlyle's 136p per share bid.

"PMI is expanding into products beyond tobacco and nicotine, as part of a natural evolution into a broader healthcare and wellness company," the New York-based company said.

Philip Morris shares were trading 0.6% higher pre-market in New York. The company is worth USD153.3 billion.

Elsewhere in London, MJ Gleeson rose 3.5% as it guided that annual results will top market expectations and match pre-virus levels.

The housebuilder said pretax profit for the financial year ended June 30 will be in line with two years earlier. MJ Gleeson posted pretax profit of GBP41.2 million in financial 2019, on revenue of GBP249.9 million. In financial 2020, revenue dropped 41% to GBP147.2 million, with pretax profit tumbling 86% to GBP5.6 million.

CEO James Thomson said: "I am pleased to announce that pretax profit is expected to be in line with that achieved in 2019, our last financial year before the impact of the pandemic."

To come in Friday's economic calendar are European Central Bank meeting minutes at 1230 BST and Canadian unemployment at 1330 BST.

By Lucy Heming; lucyheming@alliancenews.com

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