LONDON MARKET OPEN: Oil And Gold Stocks Rise, Travel Operators Slump

(Alliance News) - Stock prices in London opened lower on Monday as investors fled equities and flocked to the dollar, oil and gold as tensions between the US and Iran intensified.

The FTSE 100's fall was not as steep as that of European counterparts due to its heavy weighting of oil and gold producers.

The UK flagship index index was down 32.06 points, or 0.4%, at 7,590.34. The mid-cap FTSE 250 index was down 109.94 points at 21,878.25. The AIM All-Share index was down 0.3% at 961.41.

The Cboe UK 100 index was down 0.3% at 12,862.39. The Cboe 250 was down 0.2% at 19,837.61 and the Cboe Small Companies flat at 12,294.02

In mainland Europe, the CAC 40 in Paris was down 0.7% and the DAX 30 in Frankfurt 1.0% lower in opening trade.

US President Donald Trump warned of a "major retaliation" against Tehran after it threatened revenge for the killing Friday of commander Qasem Soleimani.

Iran announced on Sunday a further rollback of its commitments to its nuclear accord, while Iraq's parliament demanded the departure of US troops from the country as fallout from the attack spread.

On the London Stock Exchange, Russian gold miner Polymetal International was the best blue-chip performer, up 1.7% tracking spot gold prices higher. Midcap peers Fresnillo and Hochschild Mining were up 0.9%.

Gold was quoted at USD1,576.60 an ounce Monday morning, sharply higher than USD1,549.40 late Friday. The precious metal was trading at its highest levels since mid-2013 as demand for safe-haven assets increased.

Shares in oil majors also were among the handful of blue-chip risers as oil prices rose. Royal Dutch Shell 'A' and 'B' shares were up 1.5% and 1.2% respectively, while BP was up 1.6%.

Shell is London's biggest company by market capitalisation, while BP is third biggest.

Oil was quoted at USD70.02 a barrel, up from USD68.11 late Friday. The North Sea benchmark touched an overnight high of USD70.72 - its highest level since May.

Travel stocks were suffering with easyJet down 2.6%, British Airways parent International Consolidated Airlines down 2.7%, and Ryanair Holdings down 3.5%. Tour operator TUI was down 1.9%.

The threat of war reduces the appetite for travel, while higher oil prices feed through to higher jet fuel costs for airlines.

Eastern and central Europe-focused carrier Wizz Air Holdings was down 2.1%. Wizz Air reported a double-digit rise in passenger traffic for December.

For the recent month, the FTSE 250 airline reported a capacity increase of 24% to 3.7 million from 3.0 million a year before, while passengers increased by 25% to 3.3 million from 2.7 million.

As a result, load factor improved to 89.4% from 88.8%.

Hikma Pharmaceuticals was the worst FTSE 100 performer, down 4.8% after JPMorgan downgraded the drugmaker to Underweight from Neutral,

WM Morrison Supermarkets was down 2.9% after Bank of America Merrill Lynch cut the supermarket chain to Underperform from Neutral. The grocer will release a trading update on Tuesday, followed by peers J Sainsbury and Tesco on Wednesday and Thursday respectively.

German rival Aldi sold 55 million mince pies over a Christmas which saw British shoppers spend record amounts at the chain. UK sales in the four weeks to December 24 topped GBP1 billion for the first time in the company's history, and marked a 7.9% rise on the same period in 2018, Aldi revealed.

The pound was quoted at USD1.3080 early Monday, lower than USD1.3092 late Friday.

UK Prime Minister Boris Johnson is to assemble key ministers on Monday to discuss the spiralling crisis in the Middle East after the US's assassination of Iran's top military leader.

After speaking to the US President on Sunday, Johnson broke his silence to say the UK "will not lament" the death of the leader who he said was "a threat to all our interests".

The euro was quoted at USD1.1160 early Monday, lower than USD1.1177 late Friday.

Against the yen, the dollar was quoted at JPY108.15, firm against JPY107.93 late Friday.

The economic calendar on Monday has services PMI readings from Germany at 0855 GMT, eurozone at 0900 GMT and UK at 0930 GMT.

The Japanese Nikkei 225 index closed down 1.9%. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong closed down 0.8%.

China's services sector reported a reasonable rise in new work in December, data from Caixin showed on Monday.

The Chinese December services purchasing managers' index was 52.5, from 53.5 in November. This means the services sector remains in expansion, though the rate of growth has eased.

A reading of 50.0 indicates no change, and a figure below that implies contraction.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com.

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