London midday: Stocks extend gains as paper and packaging sector rallies
London equity markets had extended gains by midday on Tuesday, underpinned by strength in the paper and packaging sector after Smurfit Kappa rejected a takeover bid, as concerns about a US trade war receded.
The FTSE 100 was up 1% to 7,185.33, while the pound was up 0.4% versus the dollar at 1.3898 and 0.1% weaker against the euro at 1.1210.
Stocks in the US ended in the black overnight after some senior Republicans voiced their concerns over a possible trade war and urged the White House not to go ahead with President Trump's plans to impose tariffs in imported steel and aluminium.
Chris Beauchamp, chief market analyst at IG, said: "There are signs that Republicans in Washington are mobilising in an attempt to block further US moves, and it is this that is helping steady nerves across stock markets."
Back in the UK, investors were digesting the latest data from the British Retail Consortium, which showed like-like-sales volumes were up 0.6% on the year in February, unchanged from the previously month but above the expected 0.4% increase. Meanwhile, year-on-year growth in total sales rose 1.6% from 1.4% in January.
Non-food retail sales fell by 1.1% on a like-for-like basis and were down 2.4% in store, while food sales increased 2.8% on a LFL basis. The BRC’s measure of shop price inflation eased to -0.8% in January, from -0.5% in January.
Pantheon Macroeconomics said: "Growth in retail sales continued to match last year’s average rate in February, indicating that consumers’ spending is not about to step up and make a bigger contribution to GDP growth."
In corporate news, Smurfit Kappa surged after saying it has rejected an “unsolicited and highly opportunistic” takeover approach from International Paper Company of the US. The proposed acquisition would have meant International Paper paying cash and shares for Smurfit Kappa, leaving shareholders of the Dublin-based company with a minority stake in the combined business. Peers Mondi and DS Smith gained ground, with Mondi also boosted by an upgrade to 'outperform' from 'neutral' at Credit Suisse.
Supermarket retailers were in focus following the release of the two surveys, both of which found that Sainsbury's was the slowest growing of the big four supermarkets.
According to Kantar Worldpanel, overall supermarket sales were up 3.2% in the 12 weeks to 25 February compared to the same period last year. Meanwhile, a rival survey from Nielsen found that volumes improved in the four weeks to 24 February, but the amount shoppers spent fell bac slightly last month as inflation started to peak.
William Hill advanced after the bookmaker agreed to dispose of its Australian business for AUD300m to CrownBet.
Inspection, product testing and certification company Intertek rallied after it posted a jump in full-year pre-tax profit as revenue grew and the group lifted its dividend.
Anglo American was in the black as it said sales of rough diamonds at De Beers fell on the month but rose on the year in the second cycle of 2018.
Bodycote rose as it posted a 27% jump in 2017 pre-tax profit, partly thanks to a return to growth in general industrial markets, while brick maker Ibstock racked up strong gains despite reporting a drop in full-year profit, as adjusted earnings rose 7%.
On the downside, Just Eat tumbled as it delivered full-year results with extra toppings of revenues above its guidance and profits that exceeded analysts' forecast, as investors were left unimpressed by the higher-than-expected level of investment unveiled by the new CEO.
EasyJet flew lower even as it said passenger numbers rose 4% last month, while the load factor ticked up to 93% from 92% in February last year.
Rotork fell as it posted an 11.5% decline in full-year pre-tax profit, while Sirius Minerals retreated following the release of its 2017 results.
Retirement housebuilder McCarthy & Stone was in the red as it said it expects first-half revenues of £240m versus full-year expectations of £730m.
Office space provider IWG slipped as it posted a 14% drop in full-year pre-tax profit following a weak third-quarter for its mature business in the UK, with London a weak spot, although it struck an upbeat note on the outlook.
Temporary power provider Aggreko was firmly on the back foot as it said pre-tax profit for 2017 declined 12% to £195m.
In broker note action, Petrofac was upped to 'buy' from 'hold' at Jefferies, while Travis Perkins was cut to 'hold' at the same outfit.
Lloyds was downgraded to 'neutral' at Exane, while Hastings was cut to 'neutral' at UBS.
Market Movers
FTSE 100 (UKX) 7,185.33 0.97%
FTSE 250 (MCX) 19,707.06 0.72%
techMARK (TASX) 3,361.37 1.21%
FTSE 100 - Risers
Smurfit Kappa Group (SKG) 3,086.00p 21.40%
Intertek Group (ITRK) 5,228.00p 7.40%
Smith (DS) (SMDS) 497.70p 3.95%
Tesco (TSCO) 212.00p 3.92%
Mondi (MNDI) 1,977.00p 3.73%
Anglo American (AAL) 1,755.60p 3.69%
Antofagasta (ANTO) 892.40p 3.43%
Croda International (CRDA) 4,566.00p 2.63%
Rolls-Royce Holdings (RR.) 840.40p 2.56%
BAE Systems (BA.) 587.00p 2.55%
FTSE 100 - Fallers
Just Eat (JE.) 775.80p -8.92%
Ashtead Group (AHT) 1,941.50p -4.31%
Sainsbury (J) (SBRY) 248.90p -1.58%
WPP (WPP) 1,241.50p -1.47%
easyJet (EZJ) 1,576.00p -1.35%
International Consolidated Airlines Group SA (CDI) (IAG) 607.60p -1.04%
Barratt Developments (BDEV) 535.00p -0.82%
Centrica (CNA) 141.15p -0.63%
Rentokil Initial (RTO) 259.40p -0.61%
Land Securities Group (LAND) 916.70p -0.51%
FTSE 250 - Risers
Aveva Group (AVV) 2,014.00p 4.62%
AA (AA.) 73.98p 4.02%
Ibstock (IBST) 272.00p 3.74%
Ferrexpo (FXPO) 319.20p 3.70%
Petrofac Ltd. (PFC) 457.90p 3.64%
Go-Ahead Group (GOG) 1,643.00p 3.59%
Stagecoach Group (SGC) 138.40p 3.59%
Wood Group (John) (WG.) 629.80p 3.55%
Kaz Minerals (KAZ) 884.80p 3.46%
Vedanta Resources (VED) 746.40p 3.41%
FTSE 250 - Fallers
Aggreko (AGK) 663.60p -8.34%
Rotork (ROR) 269.90p -5.63%
Capita (CPI) 149.75p -3.67%
Galliford Try (GFRD) 824.97p -2.49%
Provident Financial (PFG) 943.00p -2.48%
IMI (IMI) 1,102.00p -2.39%
Sirius Minerals (SXX) 27.56p -2.28%
Wizz Air Holdings (WIZZ) 3,399.00p -2.10%
Spire Healthcare Group (SPI) 215.00p -1.83%
Greene King (GNK) 490.30p -1.72%