18th Mar 2019 17:04
LONDON (Alliance News) - The FTSE 100 outperformed European peers at the start of the week thanks to a strong showing from London's mining stocks and a weaker pound, together propelling the blue-chip index to a five-month high. In a bumper day for merger & acquisition news on Monday, Footasylum shares jumped 75% as FTSE 250 constituent JD Sports Fashion agreed to purchase the trainer seller, while payment processing firm Worldpay will be bought out in a USD43 billion deal and German lenders Commerzbank and Deutsche Bank confirmed merger talks.The FTSE 100 index closed up 70.91 points, or 1.0%, at 7,299.19. This marked the index's best level since early October 2018.The FTSE 250 ended down 4.33 points at 19,486.70 on Monday, and the AIM All-Share closed up 1.48, or 0.2%, at 919.61.The Cboe UK 100 ended up 0.9% at 12,382.49, the Cboe UK 250 closed down 0.1% at 17,458.20, and the Cboe Small Companies ended up 0.1% at 11,171.12.In European equities on Monday, the CAC 40 in Paris ended up 0.1%, while the DAX 30 in Frankfurt slipped 0.3%."It's been a mixed start to the new week for European stocks with the DAX underperforming," commented Michael Hewson at CMC Markets. "The FTSE 100 on the other hand has seen a strong start to the week posting its best levels this year, helped by a strong performance from the basic resource sector and a weaker pound," said Hewson.The pound was quoted at USD1.3227 at the London equities close Monday, down compared to USD1.3297 at the close on Friday.In the latest Brexit twist, House of Commons Speaker John Bercow appears to have scuppered any chance of another Commons vote on UK Prime Minister Theresa May's Brexit withdrawal agreement before Thursday's EU summit.Bercow ruled that the prime minister cannot bring her EU withdrawal deal back before MPs unless it is substantially different from the package which was decisively defeated last week.Bercow's ruling, announced in an unexpected statement to the Commons, throws a further obstacle in the way of the prime minister's scramble to get a deal agreed by the scheduled date of Brexit on March 29.Downing Street has indicated that May will not table a motion on a third "meaningful vote" ahead of Thursday's EU summit in Brussels unless there is a realistic prospect of securing a majority in the Commons.If no vote takes place over the coming days, she is expected to ask the leaders of the remaining 27 EU members for a lengthy extension to the two-year Article 50 negotiation process, delaying Brexit day for months or even years beyond March 29.In addition to the lower pound, miners also helped the FTSE 100 higher on Monday. "The gain in mining stocks has been helped by a Brazilian court ordering mining giant Vale to shut one of its mines, raising concerns about a supply shortage, which has helped push iron ore prices sharply higher," said CMC's Hewson. On Friday, Vale said it was made aware that a Brazilian court ordered it to halt production at another of its iron ore mines.Vale's Timbopeba mine in Minas Gerais state produces 12.8 million tons of iron ore per year, Vale said, adding that it will comply with the court decision.The move further reduced the Brazilian company's output capacity after a deadly dam burst at one of its mines in late January increased government scrutiny over its operations.Miners Rio Tinto and BHP Group both ended 2.7% higher, with Glencore up 1.8%. "The banking sector has had a decent day with Lloyds and RBS shares hitting ten month highs, while in Europe both Deutsche Bank and Commerzbank shares have rallied strongly," said Hewson.Lloyds Banking closed up 0.9%, while Royal Bank of Scotland closed up 0.2%, the latter having traded nearly 3.0% higher earlier in the session.In Germany, Commerzbank closed up 6.2% while Deutsche Bank ended 4.0% higher after the two banks confirmed merger talks."Commerzbank and Deutsche Bank have agreed today to start discussions with an open outcome on a potential merger," Commerzbank said.The German government, which appears to favour a deal, still owns a 15.5% stake in Commerzbank, acquired after the bank was bailed out following the financial crisis.Deutsche Bank said: "In light of arising opportunities, the management board of Deutsche Bank has decided to review strategic options. In doing so, the management board of Deutsche Bank is focused on improving the growth profile and profitability of the bank. There is no certainty that any transaction will occur.The euro stood at USD1.1335 at the European equities close Monday, against USD1.1318 at the same time on Friday.Back in London, oilfield services firm Hunting ended at the top of the FTSE 250, up 3.7% after UBS raised its rating on the stock to Buy from Neutral. Shares in JD Sports Fashion closed up 0.6% after it agreed to buy AIM-listed trainer seller Footasylum for GBP90 million, or 82.5 pence per share. Footasylum shares had a stronger reaction to the news, rising 75% to 81.50 pence. FTSE 250-listed sportswear retailer JD Sports said it expects the enlarged company to be able to take advantage of business opportunities which are not readily available to either JD Sports or Footasylum on a standalone basis.In a busy day for merger & acquisition news, Worldpay shares closed up 9.8% at 8,139.00p as it agreed to be taken over by US financial services technology firm FIS.Under the terms of the merger, Worldpay shareholders will receive 0.9287 of a FIS share and USD11.0 in cash. FIS shareholders will own 53% of the combined group and Worldpay shareholders the rest.The combination stock and cash value for Worldpay has an enterprise value of about USD43 billion. The deal includes Worldpay's debt, which FIS said it expects to refinance.The combined company is expected to generate about USD12.3 billion pro forma revenue in 2018. Payment processing firm Worldpay reported, in February, net revenue of USD3.93 billion for 2018.Stocks in New York were mixed at the London equities close, with the DJIA down 0.1%, the S&P 500 index up 0.1%, and the Nasdaq Composite flat.In commodities, Brent oil was quoted at USD67.34 a barrel at the London equities close Monday, firm compared to USD66.98 late Friday.Gold was quoted at USD1,304.17 an ounce at the London equities close Monday against USD1,302.87 at the close on Friday.In the economic calendar on Tuesday, UK wage and job data are out at 0930 GMT while eurozone construction output is due at 1000 GMT, alongside the latest ZEW economic sentiment survey. In the US, the Redbook index is at 1255 GMT, while API weekly crude oil stocks are at 2030 GMT.Later, at 2350 GMT on Tuesday, minutes from the Bank of Japan's last monetary policy meeting will be released.In Tuesday's corporate calendar, miner Antofagasta and oilfield services firm John Wood release annual results, while IT firm Softcat puts out interims and online grocer Ocado and fashion retailer ASOS both release trading statements.