6th Dec 2019 12:08
(Alliance News) - Stocks in London were higher at midday on Friday after China offered the US some concession in a bid to bring their protracted trade war to an end.
China said it will offer a tariff waiver to "some" imports of US soybean and pork, in the latest sign of easing trade tensions between Beijing and Washington. The two sides are working towards a partial deal that includes a promise to increase the purchase of US farm produce.
"The Customs Tariff Commission of the State Council is carrying out the exclusion of some soybeans, pork and other commodities based on applications from enterprises," the finance ministry said in a statement.
The FTSE 100 index was up 50.85 points, or 0.7%, at 7,188.70. The FTSE 250 was up 115.50 points, or 0.6%, at 20,822.83, and the AIM All-Share was flat at 906.40.
The Cboe UK 100 was up 0.6% at 12,183.01, the Cboe UK 250 was up 0.5% at 18,726.16, and the Cboe Small Companies up 0.1% at 11,409.72.
In Paris the CAC 40 was up 0.4%, while the DAX 30 in Frankfurt was up 0.2%.
"Continued cautious optimism in relation to the US-China trade situation has lifted European stocks. Yesterday we heard from President Donald Trump that negotiations were 'moving right along'. We have heard this sort of language before, so Mr Trump is running the risk of becoming the boy who cried wolf," said CMC Markets analyst David Madden.
In the FTSE 100, WPP was up 2.5% after the advertising agency late on Thursday confirmed a shareholder return following its Kantar stake sale will come via a buyback. The initial tranche will be GBP250 million, out of a GBP950 million total.
At the other end of the large cap index, Phoenix Group was down 0.7% after the life insurer said it will acquire its biggest rival, ReAssure, from Swiss Re.
Phoenix is paying GBP3.25 billion for ReAssure. Of this GBP1.2 billion will be in cash to Swiss Re, and then shares to both Swiss Re and other ReAssure major shareholder MS&AD Insurance Group.
Following that, the two will hold 28% of Phoenix. Swiss Re will hold 13% to 17% and MS&AD between 11% and 15%, depending on Phoenix's share price at deal closure.
ReAssure is the UK insurance unit of the Swiss giant which in July had suspended plans for a London IPO of ReAssure, citing a poor global economic outlook and fears of a no-deal Brexit.
Phoenix said on Friday the new deal will make it Europe's largest life and pensions consolidator - taking the assets under management in the company's Heritage unit to GBP329 billion from 14.1 million policies.
The pound was quoted at USD1.3131 at midday, lower than USD1.3150 at the London equities close Thursday, with less than a week to go until the UK general election.
On Friday evening, UK Prime Minister Boris Johnson will face Labour leader Jeremy Corbyn in a head-to-head debate later, after the PM was berated by Andrew Neil for refusing to do an interview on his BBC show.
Johnson has been accused of "running scared" from scrutiny by avoiding in-depth questioning from the veteran broadcaster, even though rival leaders, including Corbyn, have taken part.
"Tonight's head-to-head debate between the two leaders could well offer the last chance for Corbyn to land a meaningful blow on Boris Johnson and at the minute it seems that we are likely drifting towards a Conservative majority. The pound has pulled back a little this morning but still remains firmly higher on the week and against the US dollar has made a potentially decisive break higher after clearing prior resistance around the psychological USD1.30 level," XTB analyst David Cheetham said.
Stocks in New York were set for a higher open ahead of the closely watched US jobs report for November at 1330 GMT.
The DJIA was called up 0.2%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.
The US economy is expected to have added 180,000 new jobs in November, up from 128,000 in October. The unemployment rate is expected to hold steady at 3.6%.
"The previous lull on employment report does not mean that the markets have lost interest in the nonfarm payrolls. Just the opposite. It may well turn out that the current release will attract more attention, if it sparks speculation around the further path of the economy and, as a consequence, monetary policy. This week's news makes us cautiously wait for the data on the increase in the number of employees in the US by the end of November," FXpro analyst Alex Kuptsikevich said.
The euro stood at USD1.1093 at midday, flat from USD1.1096 at the European equities close Thursday.
"Moderately weak employment indicators in the US can cause pressure on the dollar, as the market players will put new rate cuts in prices. In this case, EUR/USD can continue to grow, rushing not only above the peaks of October by USD1.1160, but threatening to break the downtrend of the last year and a half, potentially targeting USD1.1400 in the coming weeks. If we see frighteningly weak indicators, the financial markets may start a full-fledged exit from risky assets, and the dollar will be perceived as a safe-haven currency in the turbulent markets," Kuptsikevich added.
In economic news from the continent, the pace of Germany's industrial production decline accelerated in October, Destatis reported, with the reading well short of expectations.
October's industrial production was 1.7% lower on the prior month, after a 0.6% month-on-month decline in September. On a yearly basis production was 5.3% lower, from a revised 4.5% decline in September. The September annual figure had previously been reported at a 4.3% decline.
According to FXStreet, economists had forecast a 0.1% rise in month-on-month production in October, and a 2.8% yearly decline.
Against the yen, the dollar was trading at JPY108.58, down from JPY108.71 late Thursday.
Brent oil was quoted at USD63.40 a barrel, down from USD63.72 at the London equities close Thursday. OPEC reportedly considered cutting production by an additional 500,000 barrels per day as its biannual meeting on Thursday concluded in Vienna.
OANDA market analyst Craig Erlam commented: "Four years of production cuts and low prices and the emergence of the US as an oil behemoth and the conclusion of OPEC is that more of the same is needed. Members agreed on Thursday to cut production by another 500,000 barrels, with the Saudi's likely shouldering much of the burden as they look to support the Saudi Aramco IPO with higher oil prices.
"This time it's different though, it seems, the logic being that the US will not be able to take advantage of higher prices to ramp up more shale production, as it has in the past. Good luck with that. Russia has been skeptical for some time, but appears to be on board. Of course, a signature doesn't mean compliance but that's a 2020 problem."
Gold was quoted at USD1,474.70 an ounce, lower than USD1,477.30 at the London equities close Thursday.
By Arvind Bhunjun; [email protected]
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