16th Sep 2013 16:43
LONDON (Alliance News) - The UK's main stock indices all closed firmly higher Monday, in line with gains made in equity markets across the world, as investors were lifted by the deal to make Syria give up all its chemical weapons and as Larry Summers withdrew from the race to replace Ben Bernanke as US Federal Reserve chairman.
The FTSE 100 closed up 0.6% at 6,622.86, the FTSE 250 ended the day up 0.5% at 15,292.03, and the Aim All-Share closed up 1.1% at 789.4, having hit a 2013 high of 790.07 earlier in the day.
US indices were all higher at the London close, despite industrial production figures missing expectations. The DJIA was up 1% at 15,534.29, while the S&P was up 0.9% at 1,703.36 and the Nasdaq was up 0.4% at 3,736.01.
The withdrawal of Summers from the race to be next Fed chairman means Janet Yellen is now favourite to succeed Bernanke. Yellen is seen as less keen than Summers in moving quickly to start slowing the Fed's economic stimulus program.
That's a boost to equities, but weighed on the dollar which fell against the euro and pound.
Equities were also helped by the news about Syria, which makes a military strike against the country less likely, even though the US and France are still warning they will get tough if the Syrian regime doesn't stick to the ambitious timetable agreed by the US and Russia.
Syria must provide a full inventory of its chemical weapons stockpile within a week, destroy all production equipment by November, and then destroy or remove all the weapons from the country by mid-2014 under the deal hammered out between Russia and the US Saturday.
That caused oil prices to drop sharply, with Brent down 0.6% at USD1319.25 a barrel at the close of the UK equity markets. The traditional safe-haven of gold was also down, with an ounce of gold at USD110.22, down 1.5%.
The cheaper price of oil helped lift fuel-consuming airline stocks. International Consolidated Airlines Group closed up 2.8% at 323.4635 pence, easyJet closed up 2.4% at 1,331.111p, and TUI Travel closed up 1.7% at 359.6017p.
Gold miners were amongst the worst performers, however, with Fresnillo by far the biggest loser on the FTSE 100, losing 12% to 1,057.6792. On the FTSE 250, African Barrick Gold closed down 11% at 145.879p, Hochschild Mining closed down 13% at 239.725p, Polymetal closed down 6.8% at 661.172p, and Kazakhmy's closed down 2.4% at 293.932p.
LLoyds Banking Group will be in focus at the London open Tuesday, after the UK government said after the close Monday that it would start disposing of its 38.7% Lloyds stake by selling 6%. That would make the Treasury GBP3.3 billion at Lloyds' Monday close of 76.9789 pence.
In the data calendar, Tuesday brings a flurry of economic events. Chinese FDI data is released overnight at 0300 BST. This is followed by UK retail, consumer and producer price index figures at 0930 BST. A raft of US consumer price index is expected to be released at 1330 BST, with Redbook index information at 1355 BST.
Tuesday also sees the start of the Federal Reserve's monetary policy meeting, with an announcement expected after the European markets close Wednesday.
By James Kemp; [email protected]
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