13th May 2026 09:17
(Alliance News) - Stock prices in London opened higher on Wednesday, as gilt markets steadied and investors welcomed strength in banking and mining stocks.
The FTSE 100 index opened up 73.59 points, 0.7%, at 10,338.91. The FTSE 250 was up 94.75 points, 0.4%, at 22,560.78, and the AIM all-share was up 3.78 points, 0.5%, at 814.44.
The Cboe UK 100 was up 0.8% at 1,027.63, the Cboe UK 250 was up 0.4% at 19,458.60, and the Cboe small companies was down 0.2% at 18,231.74.
In European equities on Wednesday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.9%.
In Westminster, Keir Starmer was holding talks with possible leadership challenger Wes Streeting on Wednesday morning, as the prime minister warned against a return "to the chaos and instability of the past".
Starmer's meeting with the health secretary, who would represent the centre-right of the Labour Party in any leadership contest, marked another potentially critical moment as the prime minister battles to stabilise his premiership. The meeting lasted around 20 minutes.
Wednesday is expected to bring further political drama in Westminster. Starmer will attempt to shore up his position with the unveiling of dozens of pieces of legislation in the King's Speech, aimed at demonstrating that the government still has a clear legislative programme.
UK government borrowing costs dipped on Wednesday as the gilt market steadied after yields climbed to their highest level since 2008 earlier this week.
The UK 10-year gilt was quoted at 5.073% early on Wednesday, down 0.03 percentage points from 5.103% at Tuesday's close, though above an intraday low of 5.054%.
Investors remain wary that a successor to Starmer could shift policy to the left, potentially driving higher public spending and pushing borrowing costs up further. Streeting is widely viewed by gilt investors as the least disruptive option to replace Starmer, seen as the continuity candidate most likely to stick with Labour's current fiscal rules.
Manchester Mayor Andy Burnham is regarded by some investors as a bigger risk, particularly following comments last year that the country should not be "in hock" to the bond market.
The pound recovered slightly after losing ground on Tuesday. Sterling was quoted at USD1.3521 early Wednesday, up from USD1.3505 at the London equities close. Against the euro, sterling rose to EUR1.1549 from EUR1.1517 a day prior.
The euro traded at USD1.1709 early Wednesday, down from USD1.1729 late Tuesday. Against the yen, the dollar was quoted at JPY157.71 versus JPY157.73.
On the FTSE 100, Intertek topped the index, up 6.9%, after the testing and inspection company said it is minded to recommend a takeover bid from private equity firm EQT, potentially paving the way for another major acquisition of a UK-listed company.
Intertek said its board would be minded to recommend a GBP60.00-per-share cash offer from EQT, subject to agreement on final terms and completion of due diligence. The proposal also allows shareholders to retain a 107.7p final dividend.
The offer follows earlier rejected bids of GBP51.50, GBP54.00 and GBP58.00 per share. Intertek said it remains confident in its standalone strategy but has paused its strategic review while EQT conducts confirmatory due diligence. The deadline for EQT to announce a firm offer or walk away has been extended to June 11.
The FTSE 100 was also supported by a rebound in banks and a rally in miners as metals prices rose. Antofagasta climbed 5.1%, while Fresnillo and Endeavour Mining were both up 4.5%.
Banks, which had been under pressure on speculation of a potential left-leaning challenger to Starmer and fears of new levies on the sector, recovered. Barclays rose 1.7%, followed by Lloyds Banking Group, up 1.6%.
Babcock International was among the leading gainers, up 3.3%, after reporting higher revenue and launching a new share buyback.
Revenue in the year to March 31 increased 9.1% to GBP5.27 billion from GBP4.83 billion, driven by growth in its Nuclear and Aviation businesses. Underlying operating profit fell to GBP293 million from GBP363 million and underlying basic earnings per share declined to 39.6p from 50.3p, reflecting a GBP140 million non-recurring charge linked to its Type 31 frigate contract.
Excluding the charge, underlying operating profit rose 19% to GBP433 million and operating margin improved to 8.2% from 7.5%. Free cash flow increased to GBP262 million from GBP153 million, and net debt narrowed to GBP329 million from GBP373 million.
Land revenue returned to growth in the second half but fell 3% overall to GBP1.08 billion from GBP1.12 billion, as defence growth was offset by weaker civil volumes in Rail and South Africa.
The aerospace, defence and nuclear engineering group announced a new GBP200 million share buyback programme after completing a previous GBP200 million buyback in April. It reiterated unchanged expectations for financial 2027, supported by around 70% of expected revenue already under contract.
On the FTSE 250, Vistry plunged 11% after pausing its share buyback programme to prioritise debt reduction.
The Kent-based housebuilder said it is focusing on improving cash generation amid "more challenging" market conditions. Average daily net debt in the first half is expected to be higher than a year ago due to higher land payments and slower conversion of reservations into completions, though it still expects to end 2026 with net cash above GBP100 million.
Year-to-date sales rate rose 32% to 1.20 from 0.91 a year earlier, with Open Market sales around 30% higher year-on-year despite some moderation linked to uncertainty over the Middle East conflict.
Vistry said increased incentives and discounting have been concentrated on low-margin and near-complete sites, with the impact on profit expected to ease in the second half. The forward order book slipped to GBP4.5 billion from GBP4.6 billion, while partner transaction activity remained subdued during the transition between Social Affordable Housing Programmes.
The company warned that the Middle East conflict is putting upward pressure on material and labour costs, which it is seeking to mitigate through supplier engagement. It is adopting stricter hurdles for land buying while conditions remain volatile and expects adjusted pretax profit for 2026 towards the middle of the GBP168 million to GBP283 million analyst forecast range.
In the US on Tuesday, Wall Street ended mixed. The Dow Jones Industrial Average rose 0.1%, the S&P 500 fell 0.2% and the Nasdaq Composite declined 0.7%.
Before departing for China, US President Donald Trump issued a fresh warning over Iran, saying: "Iran will either do the right thing or we will finish the job."
He reiterated that his primary objective remains preventing Iran from acquiring a nuclear weapon and said he was not factoring in the financial impact on Americans.
"Our inflation is just short term," Trump told reporters, hours after consumer price inflation came in at 3.8% year-on-year, its highest level in three years. "As soon as this war is over, which will not be long, you're going to see oil prices drop," he said.
Asked whether Americans' financial situation was influencing his push for a peace deal, Trump replied: "Not even a little bit. The only thing that matters when I'm talking about Iran: they can't have a nuclear weapon."
Brent oil was trading at USD106.69 a barrel early Wednesday, down from USD108.07 late Tuesday.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 0.8%. In China, the Shanghai Composite rose 0.7%, while the Hang Seng index in Hong Kong edged up 0.1%. The S&P/ASX 200 in Sydney closed down 0.5%.
Gold was quoted at USD4,703.36 an ounce early Wednesday, up from USD4,663.87 on Tuesday.
Still to come on Wednesday's economic calendar, the eurozone releases GDP, industrial production and employment change data.
In the UK, the King's Speech is due at around 1130 BST. In the US, producer price inflation, EIA crude oil stocks and the IEA oil market report are scheduled.
By Eva Castanedo, Alliance News reporter
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