London close: FTSE pares some losses as Russia-Ukraine talks end

London stocks were mixed at the close on Monday, with the top-flight index paring some of its earlier losses, after Western powers imposed tougher sanctions on Russia after the latter put its nuclear forces on “special alert” over the weekend.

The FTSE 100 ended the session down 0.42% at 7,458.25, and the FTSE 250 was up 0.83% at 21,081.05.

Sterling was stronger on its major trading pairs, last rising 0.05% on the dollar to $1.3416, and gaining 0.46% against the euro to €1.1955.

“While still down from Friday’s close, equity markets have been steadily closing the gaps many suffered as trading got underway this morning,” said IG chief market analyst Chris Beauchamp.

“The lack of any obvious progress in the Russia-Ukraine ceasefire talks has not provoked any further selling, and for now the lows of the day are intact.

“Even Russian threats of escalation do not, as yet, appear to be having much of an impact.”

Beauchamp said the initial shock of conflict had worn off, and aside from the huge impact on Russian stocks and the rouble, the atmosphere was “far less febrile” than last week.

“It looks like a major escalation in the conflict would be required to prompt a further leg down.”

Diplomatic talks between Ukraine and the Russian Federation in the Belarussian border town of Gomel ended late in the day, with no reports of any immediate or major developments.

The talks were taking place without preconditions from either side, although Kyiv said earlier that it was demanding an immediate ceasefire, and for Russian troops to leave the country.

Reports indicated that the Russian ground offensive had slowed - although the bombing was said to have intensified - while the talks were taking place, although Russian forces were reportedly still attempting limited advances in some areas.

The Russian also claimed that a corridor was open for civilians to leave the Ukrainian capital Kyiv.

Earlier, Ukraine’s president Volodymyr Zelensky was quoted as saying he was sceptical of the outcome of the negotiations, and that his only aim was the integrity of his country.

During the afternoon, he signed documents requesting the immediate admission of Ukraine into the European Union.

On the economic front in Russia, the country’s central bank more-than-doubled interest rates to 20% on Monday morning, as the rouble crashed to historic lows against the dollar.

In an emergency announcement, the Central Bank of the Russian Federation increased rates from 9.5%, saying that “external conditions for the Russian economy have drastically changed.”

“The increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks,” the bank said.

“This is needed to support financial and price stability and protect citizens’ savings from depreciation.”

The bank, in conjunction with the finance ministry, also ordered Russian exporting companies to sell 80% of their foreign currency.

Pictures emerged over the weekend of lengthy queues at banks and ATMs in Russia, as news of the latest economic sanctions reportedly caused many citizens to clamber for hard currency.

The Moscow Exchange remained closed all day on Monday, having earlier delayed trading.

Sanctions imposed by Western leaders included the unprecedented step of targeting Russia’s central bank directly.

On Monday, the UK government said it would prohibit financial transactions involving the Central Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance - sanctions that were mirrored by Washington during the morning in the US.

In economic news back home, UK shops saw a rebound in footfall last week, industry data showed on Monday, after a string of winter storms saw people stay home in the prior seven days.

According to retail analyst Springboard, footfall rose by 11.1% across all UK retail destinations last week from the week before, when it dropped by 3.8%.

However, that uplift emanated from a bounce back in footfall on Friday and Saturday, when footfall averaged 43.3% higher than the week before, helped by the sunny weather on these days, compared with an average decline of 22.3% over these two days in the previous week as a result of Storms Dudley and Eunice.

Over the five days from Sunday to Thursday, footfall declined by an average of 0.2% from the week before, with drops on three of the five days.

On Tuesday and Wednesday, however, footfall rose, with the largest rise occurring in UK high streets of 13.4%, compared to 8.9% in shopping centres and 2.6% in retail parks.

“Footfall across UK retail destinations bounced back in overall terms last week from the severe impact of the storms in the previous week,” said Diane Wehrle, insights director at Springboard.

“However, this was wholly due to a recovery in footfall on Friday and Saturday, which was undoubtedly helped by the dry sunny weather on these two days, but also due to exceptionally low comparables in the week before due to the impact on footfall because of Storms Dudley and Eunice.

“In contrast with Friday and Saturday - and despite the school half term - over the five days from Sunday to Thursday footfall was marginally lower last week than in the week before, with noticeable drops on Sunday and Monday.”

In equity markets, Anglo-Russian precious metals miner Polymetal International plunged 56.01%, Russian steelmaker Evraz tumbled 29.29%, and Russian gold miner Petropavlovsk slid 15.7%.

Paper and packaging giant Mondi was 12.03% lower, taking a hit from the facts that one of its largest operations is the massive Mondi Syktyvkar plant in Russia’s Komi region, and that it was suspending operations at its plant in the western Ukraine city of Lviv.

Banks were also under the cosh, with HSBC down 4.35%, Lloyds Banking Group off 2.51%, Barclays losing 3.19%, and NatWest Group 2.55% lower.

BP lost 3.95% after the oil giant said it would exit its near-20% holding in state-owned oil company Rosneft in response to Russia’s invasion of Ukraine, at an expected cost of around $25bn.

“Just how BP will manage this exit is unclear but it looks like it will be highly difficult for the company to recover anywhere near what was considered to be the full value of the stake, estimated to be $14 billion at the end of 2021, and it will also strip BP of lucrative dividends which were due to pour in from the Russian business,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Primark owner AB Foods fell 2.02% despite saying it expected half-year sales and adjusted operating profit to be strongly ahead of last year, and higher than the pre-Covid interim numbers in 2020.

Travel-related stocks were weaker again after the EU announced over the weekend that it was closing its airspace to Russian aircraft, with BA owner IAG down 3.86%, budget airlines Wizz Air and easyJet descending 4.84% and 3.77%, and travel firm TUI 4.6% lower.

IAG was also under pressure after a technical failure saw a number of short-haul British Airways flights cancelled over the weekend, stranding many travellers.

RHI Magnesita shares fell 7.64% after the company also reported on its exposure to Russia, Ukraine and the Commonwealth of Independent States (CIS).

The firm said around 3.4% of group revenues were from the CIS region in 2021, with the board saying that business would be impacted by sanctions.

On the upside, defence companies BAE Systems and Babcock International were up 10.2% and 7.92%, defence technology firm QinetiQ added 11.18%, and specialist defence manufacturer Chemring rallied 13.37%.

QinetiQ was also benefitting from a rating upgrade at JPMorgan.

Outsourcing group Bunzl jumped 7.57%, after the release of its annual results.

Oxford Instruments rocketed 31.93% after the company confirmed it had received a possible takeover offer from Spectris at 3,100p a share.

The proposal, which was made on Friday, followed a series of earlier proposals from Spectris, the first of which was received on 11 February, the company said.

It valued each Oxford Instruments share at 3,100p, with shareholders set to receive 1,950p in cash plus 1,150p in new Spectris shares for each of their shares.

Spectris shares were 9.01% lower on the news.

Market Movers

FTSE 100 (UKX) 7,458.25 -0.42%
FTSE 250 (MCX) 21,081.05 0.83%
techMARK (TASX) 4,438.15 2.20%

FTSE 100 - Risers

BAE Systems (BA.) 719.60p 10.20%
Bunzl (BNZL) 2,969.00p 7.57%
Hikma Pharmaceuticals (HIK) 2,083.00p 6.99%
Barratt Developments (BDEV) 606.00p 6.30%
Antofagasta (ANTO) 1,521.00p 5.08%
Taylor Wimpey (TW.) 150.25p 4.59%
Rightmove (RMV) 672.60p 4.54%
B&M European Value Retail S.A. (DI) (BME) 605.40p 4.06%
Flutter Entertainment (CDI) (FLTR) 10,750.00p 3.80%
Persimmon (PSN) 2,421.00p 3.78%

FTSE 100 - Fallers

Polymetal International (POLY) 351.20p -56.01%
Evraz (EVR) 150.05p -29.29%
Mondi (MNDI) 1,571.50p -12.03%
Coca-Cola HBC AG (CDI) (CCH) 1,904.00p -10.86%
Standard Chartered (STAN) 535.20p -4.79%
HSBC Holdings (HSBA) 514.60p -4.35%
Prudential (PRU) 1,136.50p -4.01%
Smurfit Kappa Group (CDI) (SKG) 3,706.00p -3.96%
BP (BP.) 363.55p -3.95%
International Consolidated Airlines Group SA (CDI) (IAG) 149.00p -3.86%

FTSE 250 - Risers

Oxford Instruments (OXIG) 2,665.00p 31.93%
Chemring Group (CHG) 310.00p 13.37%
QinetiQ Group (QQ.) 291.80p 11.18%
Ferrexpo (FXPO) 169.00p 10.46%
Darktrace (DARK) 439.00p 8.64%
Babcock International Group (BAB) 331.40p 7.92%
Spire Healthcare Group (SPI) 230.50p 7.64%
Countryside Partnerships (CSP) 304.20p 7.04%
Drax Group (DRX) 706.00p 6.33%
Oxford Biomedica (OXB) 748.00p 6.10%

FTSE 250 - Fallers

Petropavlovsk (POG) 8.00p -15.70%
Spectris (SXS) 2,806.00p -9.01%
RHI Magnesita N.V. (DI) (RHIM) 2,782.00p -7.64%
Baltic Classifieds Group (BCG) 157.00p -6.06%
Wizz Air Holdings (WIZZ) 3,404.00p -4.84%
TUI AG Reg Shs (DI) (TUI) 240.80p -4.60%
easyJet (EZJ) 603.40p -3.77%
Beazley (BEZ) 450.60p -3.22%
Derwent London (DLN) 3,044.00p -3.00%
IMI (IMI) 1,463.00p -2.98%