11th Aug 2014 16:36
LONDON (Alliance News) - UK stocks rose strongly Monday following a turnaround on Wall Street late on Friday, as investors temporarily put geopolitical concerns to one side to buy back some of the heavy losses of last week.
Investors breathed a sigh of relief as international disputes failed to intensify over the weekend and the equity markets steadily built on their early gains. However, commentators remain reserved about the extent to which the geopolitical tensions have calmed.
"The tense standoff in Eastern Europe is far from over and traders are making the most of this brief period of stability," says IG analyst David Madden.
The FTSE 100 closed up 1% at 6,632.82, the FTSE 250 closed up 1.4% at 15,460.73, and the AIM All-Share index ended the day up 0.5% to 753.44.
In Europe, the French CAC 40 closed up 1.2% at 4,197.70, and the German DAX closed 1.9% higher at 9,180.74.
After the European market closed, stocks in the US were also higher, with the DJIA up 0.3%, the S&P 500 up 0.5%, and the Nasdaq Composite up 0.9%.
The US markets, in particular, were spurred by comments made by US Federal Reserve Vice Chair Stanley Fischer on Monday morning saying that economic recoveries have been disappointing.
"Dovish talk from one of the supposed hawkish members of the Federal Reserve Stanley Fischer also helped comfort those worried about a rate-hike sooner than expected," CMC market analyst Jasper Lawler said.
In corporate news, Royal Bank of Scotland Group said that it's considering a possible sale or joint venture for the international arm of its Coutts private bank. According to a memo sent to staff on Monday morning, RBS has already achieved a "major restructuring" of the international high net worth business, but said it faces a "challenging path" to achieve its target for return on equity due to compressed margins and the increasing need for scale. RBS ended the day as the biggest faller of the FTSE-100, declining 1.7% to 339.6 pence.
The stand-out gainer on the FTSE-250 was Synthomer, which saw its shares rise 8.3% to 225.2 pence following an interim dividend increase of 25%. The speciality chemical company reported a fall in sales and profit in the first half of its financial year, hit by weakness in Asia. It reported pretax profit of GBP45.0 million for the six months to June 30, compared with GBP48.6 million a year earlier, as revenue in the period fell to GBP510.1 million, from GBP558.3 million in the first half of last year. Nevertheless, Chief Executive Adrian Whitfield remained upbeat saying in a statement that "given the strong cash generative nature of our business, the board has today updated the group's dividend policy, increasing the level of cash returns for shareholders."
Balfour Beatty also rose after it said it had "lost confidence" in a successful merger with Carillion and has concluded that it is in its best interest to continue with its current plan to refocus and simplify the group, including the sale of its US project management business Parsons Brinckerhoff. The company reported that the sale of Parsons is in the advanced stages and it expects to return GBP200 million to shareholders following a successful completion. Carillion now has until August 21 to respond with a renewed offer or to say it does not intend to make another bid. Shares in Balfour Beatty closed up 2.6% at 243.2563p, while Carillion closed up 1% at 324.0469p.
Looking ahead to Tuesday, the main economic news of the day will come from the ZEW surveys of Europe and Germany's economic sentiment. In addition, inflation figures are due to be released from Sweden, Italy and Portugal.
In the corporate calendar Just Eat will release their first set of results post IPO, and Ladbrokes and Prudential will also be releasing interim results.
By Neil Thakrar; [email protected]
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Related Shares:
Balfour BeattyPrudentialSynthomerJust EatCarillion PlcRBS.LLAD.L