3rd Feb 2015 10:48
LONDON (Alliance News) - London stocks are trading higher Tuesday supported by an indicator of UK construction activity that came in above expectations and by the easing of tensions between Greece and its debtors.
At mid-morning, the FTSE 100 is up 1.1% at 6,857.77, the FTSE 250 is up 1.1% at 16,535.32, and the AIM All-Share also is trading higher, up 0.2% at 692.67.
The UK construction sector improved in January, as Markit construction Purchasing Managers' Index came in above economists expectations. The index reading rose to 59.1 in January from a revised score of 57.6 in December. The score was higher than the expected level of 57.0.
"UK construction companies have found their feet again after a protracted slowdown in output growth at the end of 2014. Stronger trends were recorded across housing, commercial and civil engineering, although each category of activity still experienced much slower growth than the high-water marks achieved last year," says Tim Moore, a senior economist at Markit.
?The peak speed of the construction recovery seems to be over, but reports of its death have been greatly exaggerated," Moore adds.
In Europe, the newly-elected Greek government outlined proposals on Monday for ending the confrontation with its creditors by swapping outstanding debt for new growth-linked bonds, running a permanent budget surplus, and targeting wealthy tax-evaders, the Financial Times reported.
"Greece?s problems are far from over, but as far as the markets are concerned calm as been restored; a disorderly exit is not on the menu, although the Germans have yet to speak on the matter. Until Berlin has its say, nothing is certain," says IG Analyst David Madden in a report for clients.
Eurozone's producer price index fell in December and came in below the economists forecasts. The index fell 2.7% year-on-year, versus a decline in November of 1.6%.
Among London stocks, oil-related companies were among the best performers, with Weir Group up 5.2%, Royal Dutch Shell A shares up 2.9% and Tullow Oil up 2.3%. All were benefiting from the continuing rally in the Brent oil price, which remains above the psychological mark of USD50 at USD56.10 a barrel.
BP shares are up 2% after reporting Tuesday a drop in earnings during the fourth quarter of 2014, and reacted to the recent steep fall in oil prices by announcing further cuts to its capital expenditure budget for 2015 and significant impairment charges.
The oil major said underlying cost replacement profit for the fourth quarter ended December 31 was USD2.2 billion, significantly lower than the USD2.8 billion reported a year earlier, but higher than analysts' expectations of around USD1.57 billion.
BG Group was down 0.2% after reporting significant impairment charges driven by low commodity prices and saying it will slash its capital expenditure budget by up to USD7 billion in 2015. The oil company also reported a drop in fourth-quarter earnings that beat analysts' expectations.
BG's revenue fell to USD4.40 billion, from USD5.42 billion, as upstream revenue almost halved and liquefied natural gas shipping and marketing revenue fell sharply. This was partially offset by hedging gains, which totalled USD229 million.
Miners also are among the best performers mid-morning Tuesday, with BHP Billiton up 4.7%, Anglo American up 4.1% and Glencore up 3.8%. Rio Tinto and Fresnillo are up 3.4% and 3.2%, respectively.
Barclays shares are up 3.4% at 244.35p after Morgan Stanley has raised its rating on the bank to Overweight from Equal Weight, and its price target to 315p from 270p.
Aberdeen Asset Management is down 2.6% after saying assets under management dropped slightly in the first quarter of its financial year as weak investor sentiment hit inflows in December, although it said flows returned to more normal levels in January.
Futures indicate a flat open in Wall Street, with the DJIA and S&P 500 up 0.1% and the Nasdaq 100 up 0.02%.
Still ahead in the economic calendar are US Factory Orders, due to at 1500 GMT.
By Daniel Ruiz; [email protected]
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