1st Apr 2014 16:30
LONDON (Alliance News) -The FTSE 100 closed higher Tuesday, as positive US sentiment driven by comments from Federal Reserve Chair Janet Yellen suggesting the US economy will be supported for some time to come rolled through most of Asia and into the European session.
Meanwhile, the pound struggled while the euro flourished in the wake of a raft of macro-economic data releases from around the world.
The UK's blue-chip index moved sharply higher at the equity market open, following strong gains posted on Wall Street on Monday, and continued to edge higher throughout the day.
Yellen Monday said the US economy will need "extraordinary support for some time to come", in an apparent retracing of her comments following the last FOMC meeting when she guided that interest rate rises could be expected as soon as six months after the Fed has finished winding down its asset-buying programme.
"The Fed chair seems to have learnt that markets prefer a more opaque guideline with regards to any increase in rates, and has duly muddied the waters again," said Toby Morris, senior sales trader at CMC Markets.
The FTSE 100 received a further boost from Wall Street as it pushed higher after the S&P 500 hit a new record intra day high of 1,884.60 Tuesday in the wake of some US manufacturing PMI data.
The Institute of Supply Management said its purchasing managers index crept up to 53.7 in March, from 53.2 in February, fractionally below the 54.0 that economists had been expecting, while Markit Economics said that its manufacturing PMI slipped to 55.0 in March from 57.1, but remained unchanged from its initial flash estimate.
Eventually, the FTSE 100 closed up 0.8% at 6,652.61. The FTSE 250 closed up 0.8% at 16,407.56, while the AIM All-Share index underperformed its larger peers, ending the day down 0.2% at 849.08.
In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt closed up 0.8% and 0.5%, respectively.
On Wall Street, at the close of the UK equity market, the DJIA is up 0.3%, the S&P 500 is up 0.4%, and the NASDAQ Composite is up 1.1%.
In the forex market, the euro jumped on the back of some stronger-than-expected unemployment data from Germany and the wider eurozone, shrugging off some mixed Markit manufacturing purchasing managers' index numbers from across Europe.
German unemployment fell faster than expected, with the number of people unemployed in Europe's largest economy shrinking by 12,000 in March, more that the 10,000 expected. The February fall also was revised slightly higher to 15,000 from 14,000. This pulled the headline unemployment unexpectedly down to 6.7%, from 6.8% in February.
Unemployment in the single currency region as a whole remained stable in February at 11.9%. Economists had expected a slight increase in unemployment to 12.0%.
This saw the euro move higher despite a mixed batch of PMIs from Italy, France, Germany, and the eurozone. While the Italian and French figures highlighted stronger-than-expected growth in the manufacturing sectors of the respective countries, Germany's print missed expectations. The eurozone's manufacturing sector eased slightly to 53.0, down from the 53.2 recorded in February, coming in as expected.
At the UK equity market close, the euro trades at USD1.3809 and CHF1.2184.
The currency advanced against the pound in the aftermath of a disappointing UK Markit manufacturing PMI reading. The figure eased to an eight-month low of 55.3 in March, falling from 56.2 in February, disappointing economists who were looking for a further increase in activity and a reading of 56.7.
At the close of the UK equity market, sterling trades at EUR1.2053, CHF1.4686, and USD1.6647.
At the individual UK equity level, Aberdeen Asset Management ended the day as the biggest riser in the FTSE 100. The asset manager's shares closed up 7.6% after it said that it estimates that net outflows slowed to approximately GBP200 million in March, having been GBP3.9 billion across asset classes over January and February.
Aberdeen also reported growth in its pipeline of new business and that it has identified and implemented "significant additional costs savings."
Babcock International Group, closing up 3%, was another big riser after it said that it has been named as the preferred bidder for a 21-year contract to manage London Fire Brigade's vehicle fleet. The rise came after the firm jumped 4.3% on Monday after it announced that the Cavendish Fluor Partnership, its joint venture with Fluor Corp of the US, has been selected as the preferred bidder for the decommissioning of 12 UK nuclear sites.
BHP Billiton closed up 2.4% after the mining giant confirmed that it is mulling reducing its portfolio to focus on up to five commodities: iron ore, copper, coal, petroleum assets and potash .BHP Billiton's admission came after The Australian said the company is considering spinning off AUD20 billion of assets, including aluminium, manganese, thermal coal and nickel.
Merger and acquisition dealings had differing impacts on GKN and Weir Group Tuesday.
GKN's shares jumped 2.4% on the news that the firm had bought the hybrid technology business of Williams Grand Prix Engineering Ltd, the Formula 1 team's listed holding company, for GBP8.0 million in cash plus further payments based on a percentage of sales.
Conversely, Weir Group's shares ended the day down 1.2% after it confirmed that it had made an all-share takeover approach to Finnish rival Metso, which said it will consider the unsolicited approach.
Weir, which did not reveal how much its approach was worth, said it thinks it can get significant efficiencies and synergies out of a combination. According to The Times, which first reported the approach, Weir might be prepared to pay as much as EUR30 a share for Metso, which would value it at more than EUR4 billion.
In the FTSE 250, Rathbone Brothers and Jupiter Fund Management closed up 4.2% and 3.4%, respectively. Rathbone said it had raised GBP24.4 million to help fund two acquisitions, one of which is the acquisition of Jupiter's private client and charity investment management business in a deal that could be worth up to GBP53.9 million.
The wealth manager also will pay GBP14.3 million buy part of the London private client wealth-management business of Tilney Investment Management
In the data calendar Wednesday, UK Nationwide house price data are released at 0600 GMT, ahead of eurozone gross domestic product and producer price index data at 0900 GMT.
In the US, the mortgage bankers association releases mortgage applications data at 1100 GMT. The ADP employment change reading for March is released at 1215 GMT, ahead of the ISM New York index at 1345 GMT. US factory orders are scheduled for 1400 GMT.
In the corporate calendar, FTSE 250-listed Domino's Pizza Group releases an interim management statement. ASOS, the largest company in the AIM All-Share index, releases full-year results.
By James Kemp; [email protected]; @jamespkemp
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