LONDON (Alliance News) - London stocks opened higher Monday, with shares in BG Group and Royal Dutch Shell benefiting from the approval of Shell's takeover by Chinese regulators.
The FTSE 100 index opened higher, off the late-September lows it touched on Friday, up 0.7% at 5,996.40 points. The FTSE 250 was up 0.4% at 16,944.78, while the AIM All-Share was down 0.1% at 724.64.
In Europe, the French CAC 40 index was up 0.5% and the German DAX 30 up 0.6%.
BG Group and Royal Dutch Shell 'A' shares, were up 1.9% and 0.4%, respectively, after Shell said its GBP47.0 billion takeover of BG has secured approval from regulators in China, providing the final pre-conditional approval required for the merger.
The Chinese Ministry of Commerce gave its unconditional clearance for the deal, adding to the approvals the pair already received in Brazil, the European Union and Australia.
"This is a strategic deal that will make Shell a more profitable and resilient company in a world where oil and gas prices could remain lower for some time. We will now seek approval from both sets of shareholders as we move towards deal completion in early 2016," said Ben van Beurden, Shell's chief executive.
Blue-chip Old Mutual, up 7.1%, and FTSE 250-listed Investec, up 10%, were recovering some ground after both dropping 11% on Friday, adding to losses seen on Thursday. The two stocks suffered as the South African rand traded near record lows against the dollar following the dismissal of South African Finance Minister Nhlanhla Nene.
Both companies derive a great deal of their earnings from South Africa, and the depreciation of the rand reduces the translation of rand earnings into sterling.
Power station operator Drax Group was among the best performers in the FTSE 250, up 6.7% after being upgraded to Buy from Sell by Goldman Sachs.
Specialty pharmaceuticals company BTG was up 2.7% after it said its PneumRx coil implant for patients with homogeneous or heterogeneous severe emphysema met all of its primary and secondary endpoints in its recent clinical study RENEW.
Additionally, the company received 510k clearance from the US Food and Drug Administration for its LC Bead LUMI, meaning it has permission to market the product. The LC Bead device is used to block abnormal blood vessels, for use in hypervascular tumours and arteriovenous malformations.
LC Bead LUMI, the latest iteration of this device, allows for real-time visible confirmation of the bead location.
Oil prices were still under pressure after the open Monday, with Brent oil price priced at USD37.89 a barrel, a low it hasn't seen since December 2008. At the close on Friday, Brent stood at USD38.18 a barrel. West Texas Intermediate was at USD35.49 a barrel shortly after the London open.
The new lows were made after the Organisation of the Petroleum Exporting Countries said on Thursday last week that its members pumped more oil in November than in any month since late 2008. The cartel also forecast little increase in demand for its crude next year.
This followed an announcement the week before, in which OPEC said it will maintain oil production at current levels and refrained from outlining a production ceiling.
Though clearly the main event this week will be the US Federal Reserve interest rate decision on Wednesday, there are still three days until Janet Yellen announces the Federal Open Market Committee's decision to press, or not to press, the rate-hike button.
Ahead of that, the PBoC last week hinted that it would reduce the yuan's link to the dollar. The China Foreign Exchange Trade System, a unit of PBoC, introduced a new yuan index on Friday that measures the value of currency against a basket of currencies instead of the dollar.
"Could Beijing's suggestion about pegging the yuan to a basket rather than the dollar, and the currency falling to a fresh four-year low, see Yellen & Co spooked again? Or after the [European Central Bank President Mario] Draghi disappointment [after releasing its easing measures two weeks ago], has the issue of credibility become too much to risk?," asked Michael van Dulken, analyst at Accendo Markets.
In Asia on Monday the Japanese Nikkei 225 index closed down 1.8%. In China, the Shanghai Composite ended up 2.5%, while the Hang Seng index in Hong Kong finished down 0.7%.
In a light economic calendar Monday, eurozone industrial production, due at 1000 GMT, and a speech from European Central Bank President Mario Draghi in Italy are likely to attract some market attention Monday.
"We look for a small rise of 0.3% month-on-month for euro area industrial production in October. German output, already released, disappointed with a smaller-than-expected rise of 0.1% (excluding construction), potentially reflecting ongoing soft external demand, but outturns were somewhat stronger in France and Italy," said Lloyds Bank senior economist Hann-Ju Ho.
"The context for any comments on policy by Mr Draghi will be the lingering disappointment from the increase in policy stimulus by the ECB on December 3," added the Lloyds economist. "Some ECB speakers have since put the blame on unrealistic expectations of market participants, rather than faulty communication by the central bank. Mr Draghi could reiterate that there can be no limit to policy easing in order to meet the ECB's inflation goal."
By Daniel Ruiz; danielruiz@alliancenews.com
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