11th Sep 2020 11:56
(Alliance News) - Stocks in London were trading slightly higher on Friday midday, helped by UK-Japan trade deal which provided optimism as Brexit talks falter.
The FTSE 100 index was up 27.43 points, or 0.5%, at 6,030.75 Friday midday. The mid-cap FTSE 250 index was up 73.62 points, or 0.4%, at 17,647.57, and the AIM All-Share index was up 0.1% at 956.11.
The Cboe UK 100 index was up 0.1% at 599.70. The Cboe 250 was up 0.2% at 15,021.38, and the Cboe Small Companies flat at 9,547.22.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both 0.3% lower Friday afternoon.
"UK markets are making tentative gains in early trade today, with a UK-Japan trade deal agreement providing a rare boost for sentiment in a week that has been dominated by pessimism over the scope for an agreement by year-end," said Joshua Mahony, senior market analyst at IG.
Britain on Friday said it had secured its first major post-Brexit trade agreement – a free trade deal with Japan – the day after bitter wranglings with the EU.
The Department for International Trade said the deal, which largely replicates the current EU-Japan deal, will be worth GBP15.2 billion.
The UK-Japan Comprehensive Economic Partnership Agreement was agreed in principle by International Trade Secretary  Liz Truss and Japan Foreign Minister Toshimitsu Motegi during a video call on Friday.
Bilateral trade is currently conducted under the EU-Japan deal that came into effect last year, but that agreement will no longer apply to Britain from December 31.
Sterling was quoted at USD1.2800 on Friday, lower than USD1.2877 at the London equities close on Thursday.
The euro traded at USD1.1866 on Friday, lower on USD1.1880 late Thursday. Against the yen, the dollar was quoted at JPY106.21, firm from JPY106.20.
The EU will continue negotiating a future trade deal with Britain after Brexit, despite a move by London to renege a key part of the withdrawal agreement signed last year, the bloc's internal markets commissioner said Friday.
"We're in the final stretch of these negotiations, and for our part they will be carried through to the end," Thierry Breton told BFM television.
"We are not going to carry out any 'empty chair' diplomacy, that is quite clear," he added.
Britain's Prime Minister Boris Johnson this week set an October 15 deadline for a post-Brexit trade agreement, which would come into effect from January.
But Johnson threw the talks into disarray after confirming he would seek new legislation that would override a deal with the EU regarding Northern Ireland, which calls for borderless trade with the rest of Ireland.
EU leaders have denounced the move, and Breton confirmed that "we are determined" to stick to the original agreement.
Among the FTSE 100, London Stock Exchange was up 1.8%. Pan-European stock market operator Euronext said it is in negotiations with the London Stock Exchange Group to buy the Milan stock market.
Euronext – which operates the stock exchanges of Amsterdam, Brussels, Dublin, Lisbon, Oslo and Paris – confirmed in a statement "it is currently in discussions with Cassa Depositi e Prestiti to submit an offer to London Stock Exchange Group for the acquisition of the business and key operational assets of Borsa Italiana."
"A further announcement will be made as and when appropriate," it said.
Anglo American was up 1.8% after reporting that diamond markets improved in August, with provisional seventh cycle sales higher in 2020 than the year before and more than twice what they had been in the sixth cycle.
The London-based miner of diamonds, copper, coal, platinum and other minerals reported the sales value of rough diamond sales for De Beers in cycle seven of 2020 as USD320 million. This is a provisional figure and represents sales as at September 2020.
In comparison, the actual sales value in cycle seven of 2019 was USD287 million and the actual sales value in cycle six of 2020 was USD116 million.
As a result of restrictions on the movement of people and products in various jurisdictions worldwide, De Beers has implemented "a more flexible approach to rough diamond sales during the sixth and seventh sales cycles of 2020".
As such, the provisional rough diamond sales figure for cycle seven reflects the expects sales value for the period from August 19 to September 10 and is still subject to adjustment based in final completed sales.
Among the mid-caps, Ferrexpo was up 5.3%. The Swiss-headquartered iron ore company's 6.6 cents per share special dividend, combined with its June special dividend and interim dividend of the same amount, takes Ferrexpo's total distributions announced for 2020 to 19.8 cents per share from 13.2 cents per share.
Ferrexpo said: "Today's special interim dividend reflects the group's strong cash generation and is in line with the board's strategy to maintain a balance between sustainable and attractive shareholder returns, investment in growth opportunities and balance sheet strength. Since the first half of the year, Ferrexpo's operations have continued to perform well and demand remains strong for the company's iron ore pellets."
Royal Mail was trading 5.1% higher as JPMorgan raised the postal services provider to Neutral from Underweight.
Travis Perkins and Essentra - which were up 2.1% and 3.0%, respectively - were also benefiting from rating increase from Jefferies. Both companies were upgraded to Buy from Hold.
Turning to UK data, the Office for National Statics said the UK economy recorded its third straight month of growth in July, amid two consecutive quarterly falls, but saw the rate of growth slip.
As a result, the UK gross domestic product has still only recovered just over half of the lost output caused by the coronavirus.
The ONS noted July's 6.6% growth marked the country's third consecutive monthly increase. In the first and second quarter, however, GDP shrank, on a quarterly basis, by 2.2% and 20%, respectively.
On an annual basis, UK gross domestic product fell 21% in the three months to June, having contracted 1.7% in the first quarter of 2020.
The second quarter contraction was the largest the UK had seen since 1955.
Hargreaves Lansdown Senior Analyst Susannah Streeter noted that despite the solid growth in July, the UK economy is "still languishing way below pre-pandemic levels with so many sectors of the economy suffering from a drop in demand".
July GDP is now 19% higher than its April low. However, it remains 12% below the levels seen in February, before the full impact of the coronavirus pandemic.
Stocks in the US are on course for a higher start, with the Dow Jones Industrial Average seen up 0.7%, S&P 500 called 0.9% higher and Nasdaq Composite pointed up 1.0%.
The economic events calendar on Friday has US inflation figures at 1330 BST.
By Evelina Grecenko; [email protected]
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