(Alliance News) - Stock prices in London opened higher on Tuesday following a positive economic report from China, while Smiths Group rose despite scrapping its dividend and delaying its medical unit spin-off.
"China provided Western investors with a light at the end of the tunnel on Tuesday, showing it is possible to return to growth after the worst (hopefully) of the coronavirus crisis," said Spreadex analyst Connor Campbell.
The large-cap FTSE 100 index was up 95.03 points, or 1.7%, at 5,658.77.
The mid-cap FTSE 250 index was up 268.04 points, or 1.8%, at 14,892.67. The AIM All-Share index was up 0.9% at 669.44.
The Cboe UK 100 index was up 1.5% at 9,565.81. The Cboe 250 was up 1.3% at 12,768.75, and the Cboe Small Companies was up 0.1% at 8,037.90.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 1.6% and 1.8% respectively early Tuesday.
The Japanese Nikkei 225 index closed down 0.2%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong is up 0.9%.
China's manufacturing purchasing managers' index, a key gauge of factory activity, jumped to 52.0 from a record low 35.7 the month before and beating market expectations of 44.8, according to a Bloomberg survey. Anything above 50 is considered growth.
The National Bureau of Statistics said the number "reflects that over half of surveyed companies had improvements in their resumption of work and production from the month before". But it stressed "it does not represent that our country's economic operations have returned to normal levels".
China's non-manufacturing PMI came in at 52.3, also in positive territory and also well above analyst predictions.
Robert Alster, head of Investment Services at Close Brothers Asset Management, said: "Covid-19 continues to put pressure on economies around the globe and these figures demonstrate the size of the challenge ahead. China found itself leading the way as the virus outbreak first took hold there. It is still far too early to know either the full impact of the coronavirus or how long it will restrict growth, but governments around the world are keeping a watchful eye on China as it leads the way out of the pandemic."
In the FTSE 100, Smiths Group was up 7.5% after the engineer joined a slew of UK companies pulling dividend payments in the face of the Covid-19 health crisis.
In addition, the company said it was not "practicable to complete" the separation of Smiths Medical in current circumstances and has delayed the separation.
Smiths Medical makes products such as catheters, thin medical tubes which can be used in surgical procedures. It was originally set to be demerged by this coming June. However, due to the company making ventilators for the UK government, coupled with uncertainty created by Covid-19, Smiths has decided to delay the separation.
For the half year to January 31, Smiths said continuing operations delivered underlying revenue growth of 3%. Reported revenue increased 8%, including the acquisition of fluid management business United Flexible. Looking beyond the Covid-19 outbreak, Smiths said it is well placed to deliver consistent outperformance and is well-positioned in long term, attractive growth markets.
Imperial Brands was up 6.7% after the tobacco firm said there has been no "material impact on group performance" from Covid-19 so far and current trading remains in-line with expectations.
Flutter Entertainment was up 6.5% after the UK Competition & Markets Authority cleared the merger between the gambling firm and Canadian peer Stars Group.
Royal Dutch Shell 'A' and 'B' shares were up 5.3% and 5.9% respectively after the oil major said it expects to see a "minor" affect from disruption caused by the coronavirus in its first quarter performance.
At the other end of the large cap index, AVEVA was down 0.5% after Barclays downgraded the industrial software company to Equal Weight from Overweight.
The pound was quoted at USD1.2301 early Tuesday, down sharply from USD1.2404 at the London equities close on Monday.
In economic news, the UK's annual economic growth was confirmed at 1.1% in the fourth quarter of 2019, unchanged from the previous reading. The figure was in line with market expectations.
Consumer confidence in the UK weakened at the start of March, even prior to the full impact of the Covid-19 health crisis, research firm GfK said Tuesday.
The firm's overall consumer confidence barometer declined by two points to negative 9 from negative 7 in February. This still was better than the score of negative 13 recorded in March 2019, which was just ahead of the first expected Brexit date.
However, the survey on which the recent index is based was carried out in the first two weeks of March, before UK Prime Minister Boris Johnson imposed restrictions on movement in the country to slow the spread of the new coronavirus.
Against the yen, the dollar was trading at JPY108.28 Tuesday morning, up from JPY107.93 late Monday. The euro was quoted at USD1.1012, lower from USD1.1042.
Brent oil was quoted at USD23.04 a barrel, up from USD22.09. The North Sea benchmark fell to USD21.65 overnight - its lowest level in 18 years.
Gold was quoted at USD1,614.75 an ounce, soft from USD1,619.47.
The economic events calendar on Tuesday has Germany unemployment figures at 0855 BST and eurozone inflation readings at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Smiths Group (SMIN)
Imperial Brands (IMB)
Flutter Entertainment (FLTR)