LONDON MARKET OPEN: Commodity Stocks Push Higher As Oil Price Rebounds

LONDON (Alliance News) - Stocks in London opened broadly higher, still enjoying European Central Bank President Mario Draghi's dovish comments on Thursday, and with commodity stocks pushing higher after a rebound in oil prices.

The FTSE 100 index was up 1.7% at 5,870.34 points, the FTSE 250 up 1.2% at 16,023.87 and the AIM All-Share up 0.5% at 680.43. In Europe, the CAC 40 in Paris was up 2.1% and the DAX 30 in Frankfurt up 1.8%.

Asian stocks ended higher on Friday, with the Japanese Nikkei 225 in Tokyo up 5.9%, the Shanghai Composite up 1.3% and the Hang Seng index in Hong Kong up 2.9%.

Miners were at the top of the FTSE 100, with Antofagasta up 8.1%, BHP Billiton up 4.3%, Anglo American up 3.9% and Rio Tinto up 3.8%.

Oil stocks in London were among the best performers after a rebound in oil prices. Both Brent and West Texas Intermediate benchmarks rose back above the USD30 line, with Brent crude standing at USD30.65 a barrel after the London open, while WTI was quoted at USD30.66 a barrel.

Royal Dutch Shell 'A' shares were up 4.1%, BG Group up 3.6% and BP up 3.3%. In the FTSE 250, Tullow Oil was the best performer, up 8.1%, Petrofac was up 6.3% and Amec Foster Wheeler was adding 6.1%.

Advertising and public relations giant WPP was up 3.0% after saying it has acquired a majority stake in German digital agency Conrad Caine, via its digital agency POSSIBLE Worldwide. Financial details of the acquisition were not disclosed.

Barclays was up 2.6% after Berenberg upgraded the British bank to Hold from Sell.

Among the few losers in the blue-chip index, Pearson, down 1.4%, was giving back some of the gains seen on Thursday, when it ended up 11%. The education and publishing group tabled extensive restructuring plans and pledged to maintain its dividend, news investors welcomed with open arms as the group also said it will fall short of its guidance for 2015.

In the FTSE 250, Computacenter was down 0.3%. The IT services provider said it expects to meet its upgraded forecasts for 2015, despite a "substantial headwind" throughout the year from the strength of sterling against the euro.

Computacenter said its revenue for 2015 was flat at actual exchange rates, but increased 5% at constant currency. The company estimates that its profits have been hit by around GBP3 million as a result of the strength of sterling. In the UK revenue rose 3%, with growth remaining consistent in its Services segment despite a significant reduction in one contract. In Germany revenue rose 14% at constant currency.

Stocks were adding to the gains seen on Thursday after Draghi hinted at more stimulus measures from the bank's next policy meeting in March.

In his press conference after the ECB kept all key interest rate unchanged, Draghi said - no fewer than four times - that there were "no limits" to the policy tools the bank can use to reach its inflation goal and to boost euro area growth.

"There are no limits to how far we are willing to deploy our instruments within our mandate to achieve our objective of a rate of inflation which is below but close to 2%," Draghi said.

Draghi said the downside risks have increased since the year began, amid heightened uncertainty about emerging market economies' growth prospects, volatility in financial and commodity markets, and geopolitical risks. Further, he said euro area inflation dynamics continue to be weaker than expected.

Eurozone inflation data released on Tuesday by Eurostat showed consumer prices rose to 0.2% year-on-year in December. At the same time, Eurostat revised down the November figure to 0.1% from an originally published 0.2%, with falling energy costs acting as a brake on consumer prices.

The euro dropped heavily as Draghi spoke to a low of USD1.0776 against the dollar. Shortly after the open Friday, the euro was at USD1.0836.

Still ahead in the economic calendar Friday, there are a series of flash Markit manufacturing, services and composite Purchasing Maneger's Index readings from Europe. Germany at 0830 GMT and the eurozone at 0900 GMT. This is followed by UK retail sales and public sector net borrowing at 0930 GMT.

"We expect the flash January PMIs to reiterate the healthy picture shown in the final December release, with only a slight decline anticipated in the composite and manufacturing numbers for the euro area as whole," said analysts at French bank Societe Generale.

Already released, France's manufacturing PMI came in at 50.0, below expectations of 51.3. Meanwhile, the reading for services PMI was 50.6, ahead of economists estimates of 50.2. The composite index came in at 50.5.

In the US, the Chicago Fed national activity index is at 1330 GMT, before flash US Markit manufacturing PMI at 1445 GMT, and existing home sales at 1500 GMT. The Baker Hughes US oil rig count is at 1800 GMT, after the close of European stock markets.

By Daniel Ruiz; danielruiz@alliancenews.com

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