London close: Stocks finish session with solid gains
London stocks carved out solid gains on Monday, helped along by strength in the energy and banking sectors as investors continued to keep an eye on Brexit developments.
The FTSE 100 was 1.20% firmer at 7,036.00, while the pound was up 0.03% against the dollar at 1.28191 and essentially flat versus the euro at 1.1301 after Theresa May's Brexit deal was signed off at a summit of European Union leaders on Sunday.
The real test is yet to come, however, as May needs to get the deal through Parliament in a vote scheduled for 12 December.
Joshua Mahony, market analyst at IG, said: "With the EU27 passing the bill without much fuss, we find ourselves one step closer to Theresa May’s deal becoming reality. However, hurdles remain, and the overall indecisiveness seen in the pound provides a good representation of the uncertainty of what the future holds in store for the UK economy."
Developments in Italy also helped to underpin the tone after Prime Minister Matteo Salvini signalled over the weekend that the country may lower its contentious borrowing target. This comes after the EU rejected Italy’s budget proposal for next year over the country’s plans to keep its deficit at 2.4%.
On home shores, industry data showed that the housing market saw an unexpected spike in activity last month. Gross mortgage lending across the residential market in October was £25.5bn, a 5.6% increase on the same month a year ago. The number of mortgage approvals for house purchases was also up, ahead of most economists’ forecasts at 45,289, a 3.6% year-on-year improvement.
The total number of mortgage approvals was down, however, off 4.1%, because of a heavy 13.5% decline in remortgage approvals.
UK Finance also reported an increase in spending on credit cards in October, up 12.1% at £11.3bn, with the outstanding level of credit card borrowing growing by 5.7% over the past 12 months.
Meanwhile, figures from retail analysts Springboard revealed that the number of shoppers popping into bricks-and-mortar stores on Black Friday dropped by 5.4% compared to last year's event, while online transactions surged 46%.
Banks were the strongest performers, with HSBC, Barclays and RBS all higher, while energy shares also pushed up as oil prices recovered after Friday's plunge and ahead of next week's OPEC meeting.
BP and Shell both gushed higher as West Texas Intermediate rose 2.4% to $51.64 a barrel and Brent crude gained 2.79% to $60.49.
"The fear is that Saudi Arabia will bow to US pressure to keep prices low. So, talks between Russia and OPEC on curbing output could hinge on whether the Saudis are willing to antagonise its US ally," said Markets.com analyst Neil Wilson.
"Following the Khashoggi case, one senses that Trump has a fair bit of leverage and will use it. If Saudi Arabia, as the de facto OPEC leader, doesn’t get further agreement to cut production, prices should continue to fall. But even a modest production cut would be unlikely to dissuade oil bears that the market will be oversupplied in 2019. Speculative net longs have been further cut to 381k."
Elsewhere, precious metals miner Fresnillo was the standout gainer following heavy losses last week on the back of worries about the impact of new mining laws in Mexico, with Wood Group following close behind after an upgrade to 'buy' at HSBC.
British Airways and Iberia parent IAG flew higher following a report that it is considering bidding for budget airline Flybe. According to the Telegraph, IAG is planning to go head to head with Virgin.
On the downside, Melrose Industries was the worst performer after Sky News said the company was weighing up whether to press on with an immediate auction of GKN Powder Metallurgy following initial bids last week that valued the business at about £1.6bn - well below analysts' forecasts. Sky cited a source as saying: "They will sell the business but it may not be through this particular auction."
Intu Properties was in the red after Mike Ashley reportedly threatened to close all his stores in shopping centres owned by Intu in a row over rent, and Rio Tinto ticked a little lower even as it struck a deal to sell its majority stake in the Rössing mine in Namibia to China's state nuclear company.
AstraZeneca was a little weaker as it said the US Food and Drug Administration has granted orphan drug designation for its Fasenra treatment for the autoimmune disease eosinophilic granulomatosis with polyangiitis.
On the broker note front, Pennon was downgraded to 'sector perform' at RBC Capital Markets, which also cut Severn Trent to 'outperform' from 'top pick'. TalkTalk was downgraded to 'neutral' at Bank of America Merrill Lynch.