24th Sep 2013 10:15
LONDON (Alliance News) - London's main stock indices are trading mixed as markets continue to stabilise following large gains made last Thursday and investors await who will join Chancellor Angela Merkel in a German coalition government.
On Monday, Merkel said she is in contact with the Social Democrats with the hope of forming a coalition. Although discussion are on-going, investors are wary after the last Social Democrat - Christian Democratic Union coalition collapsed in 2009.
Data from Germany and the UK showed signs of improvement, but both missed consensus forecasts cited by FXstreet.com.
Ifo business confidence data from Germany disappointed early Tuesday. The business climate index edged up to 107.7 in September, marginally higher than the revised reading of 107.6 in August, but missed expectations of 108.2.
UK mortgage approvals increased in August from July, both in terms of value and volume. The numbers of mortgages approved for house purchases increased to 38,228 from 37,428, the highest since 2009. However, the level was below the consensus forecast cited by FXstreet.com of 38,600.
The pound declined against other major currencies both before and in the immediate aftermath of the 0930 BST release of UK mortgage approval data. The sterling hit a six-day low of 1.5974 against the US dollar, and declined to 1.4560 against the franc and 0.8449 against the euro
By mid-morning Tuesday, the FTSE is flat at 6,559.73, the FTSE 250 is up 0.5% at 14,998.33, whilst the AIM All-Share index is down 0.2% at 788.19.
Among individual stocks, Ferrum Crescent, up 51%, is a big mover on the AIM All-Share index. The company said Monday, after the market close, that it had signed an investment agreement worth USD13.5 million with Anvwar Asian Investment over its Moonlight Deposit. Under the deal, Anvwar will acquire a 35% shareholding in Ferrum Iron Ore Limited for USD10 million. A further USD3.5 million will go towards its bankable feasibility study costs at the Moonlight project.
Rolls-Royce is the biggest gainer on the blue-chip index. The company is up 1.3% after Jefferies increased its target price to 1,400 pence from 1,250p. Jefferies believes that the delivery of Trent engines will double by 2016. The broking house expects this to cause Rolls-Royce's TotalCare-related cash flows to remain positive in 2013/2014 before strengthening in 2015/2016, and to remain strong in the long term.
Rangold Resources, down 2.6% is the biggest loser on the FTSE 100 as the mining company suffers on the back of a decline gold price. Gold has slipped 0.3% to USD1317.30 per ounce.
There is a string of US data still to come Tuesday. US Redbook figures are scheduled for 1355 BST, with housing price index data at 1400 BST. Consumer confidence and Richmond Fed manufacturing index will be released at 1500 BST.
By James Kemp; [email protected]
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