17th Jun 2016 07:36
LONDON (Alliance News) - Stocks in London were higher Friday, with banking stocks and insurers leading gainers, as fears of UK vote next Thursday to leave the EU receded among investors, with the pound also gaining ground and a rally in gold reversing.
The FTSE 100 index was up 1.2%, or 68.03 points, at 6,018.29.51. The FTSE 250 was up 1.8% at 16,327.36 and the AIM All-Share was up 0.3% at 711.19.
In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were adding 0.9% and 1.0%, respectively.
"A positive European open follows gains in both the US and Asia that can be attributed to diminished fears of a UK exit from the European Union," said Michael van Dulken, head of research at Accendo Markets.
Van Dulken linked this with the murder of Jo Cox. Both of the main referendum campaigns suspended their activities as news of the Labour MP's death broke on Thursday and a series of engagements planned for Friday have been cancelled.
"The assumption is that the tragic event will sway the undecided to vote Remain and possibly even reverse some of the Leave momentum seen in recent polls," noted the analyst.
Banks were among the best performers in the FTSE 100, with Lloyds Banking Group up 3.4%, Barclays up 2.9% and Royal Bank of Scotland Group up 2.8%. Insurers were also firmly in the green, with Legal & General Group up 2.5% and Aviva up 2.0%.
Standard Life was up 2.0%, after saying HDFC Standard Life Insurance Co, Max Life Insurance Co and Max Financial Services have entered into merger talks. HDFC Standard Life is the FTSE 100-listed life insurer and investment manager's Indian unit, in which it holds a 35% stake. The two Max businesses are India-based financial services firms.
Standard Life said any deal would be subject to board, shareholder, regulatory, court and other approvals and added there is no certainty any deal will proceed at the current time.
Stocks were recovering some of the ground lost so far this week because of polls consistently giving the Leave campaign the lead ahead of the EU referendum in the UK next Thursday.
With just a week left before the deciding vote, a Survation poll on behalf of IG showed Thursday the Leave campaign in the lead at 45%, up 7 percentage points since Survation's last poll, whilst Remain was at 42%, down 2 points, and 13% were undecided, down 5 points from the previous poll.
The Bank of England said Thursday a Brexit vote is likely to send the pound plummeting as pre-poll jitters are already hitting the housing market. The BoE insisted it is "increasingly probable" a Leave vote in next week's referendum would sharply damage the value of sterling across international money markets.
The pound on Thursday touched a low of USD1.4011, a level it hasn't seen since early April. However, sterling has recovered some ground since, quoted at USD1.4266 after the London equities open Friday, compared to USD1.4082 at the equities close Thursday.
The Japanese Nikkei 225 index ended up 1.1% Friday. In China, the Shanghai Composite added 0.4%, while the Hang Seng index in Hong Kong is up 0.3%.
In New York, the Dow Jones Industrial Average closed up 0.5% on Thursday, the S&P 500 up 0.3% and the Nasdaq Composite up 0.2%.
Among other individual stocks in London on Friday, Wolseley was up 2.2% after Liberum upgraded the building materials company to Buy from Hold.
Randgold Resources and Fresnillo, down 4.2% and 2.3%, respectively, were the worst blue-chip performers, following a decline in the gold price. In the FTSE 250, Centamin was down 3.3%.
The precious metal was quoted at USD1,284.32 shortly after the open Friday, much lower than the USD1,309.49 seen Thursday at the close after a strong rally following the Fed meeting. Gold hit a two-year high Thursday of USD1,315.44 an ounce.
In the economic calendar, the eurozone current account is at 0900 BST, while US housing starts are at 1330 BST. The US Reuters/Michigan consumer sentiment index is at 1500 BST.
By Daniel Ruiz; [email protected]
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