London close: LSE leads FTSE higher on merger reports

The FTSE 100 finished higher on Tuesday, led by the London Stock Exchange after the Intercontinental Exchange confirmed it was considering making a bid for the UK exchange to rival Deutsche Boerse’s.

ICE, which owns the New York Stock Exchange, said no approach has been made to the LSE yet.

LSE confirmed it had not received a proposal from ICE and that it was still in discussions with Deutsche Boerse regarding a potential merger.

“Those buying into LSE are hoping that a bigger US appetite for LSE’s operations will be rewarded with an even higher offer than the £20bn merger of equals with DB that is currently on the table and which would result in the biggest exchange in Europe; a genuine rival to US markets,” said Mike van Dulken, head of research at Accendo Markets.

Meanwhile, investors shrugged off a disappointing manufacturing data in the UK and in China.

The Markit/CIPS manufacturing purchasing managers’ index, measuring sector activity in the UK, fell to 50.8 in February from 52.9 in January. It was below economists’ expectations for a reading of 52.2 and marked the lowest reading since April 2013. Still, it remained just above the 50 mark that separates expansion from contraction.

"The near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England’s increasingly dovish stance,” said Rob Dobson, senior economist at Markit.

The official China manufacturing PMI dropped to 49.0 in February from 49.4 in January, surprising analysts who had expected no change. Caixin’s PMI on manufacturing was released the same day, also showing a worse-than-expected drop. The PMI fell to 48.0 in February from 48.4 in January. Economists had pencilled in an unchanged reading.

In contrast, Markit’s Eurozone manufacturing PMI was revised higher at 51.2 in February from a flash estimate of 51.0, ahead of analysts’ projections for no change. However it marked a slowdown from the previous month’s reading of 52.3.

The unemployment rate in the Eurozone fell to 10.3% in January from 10.4% the month before, better than forecasts for it to remain the same and the lowest level since 2011, giving the European Central Bank some positive news to weigh against poor inflation and confidence data.

In the US, Markit’s manufacturing PMI was revised higher than expected in February to a reading of 51.3 from a previous estimate of 51.0. The index was a touch higher than analysts’ forecasts of 51.2 but marked a slowdown from 52.4 in January.

The Institute of Supply Management’s PMI on manufacturing rose to 49.5 in February from 48.2 in January, beating analysts’ estimates of 48.5. US construction spending data also surpassed forecasts. Spending increased by 1.5% on the month to a seasonally-adjusted rate of $1.14bn in January, compared to economists’ expectations for a 0.4% rise, the Commerce Department revealed.

Oil prices snapped an earlier rally with Brent crude falling 0.57% to $36.36 per barrel and West Texas Intermediate crude rising 0.29% to $33.85 per barrel at 1635 GMT.

In company news, insurer Direct Line was a high riser after it said gross written premiums from ongoing operations rose 1.7% in 2015 to £3.5bn. The company saw 4.8% growth in its motor division for the year and 7.1% in the fourth quarter.

Rio Tinto gained after the miner said it has sold its 40% interest in the Bengalla coal joint venture in Australia for US$616.7m (£443m).

Equipment rental firm Ashtead slumped as analysts pointed to concerns over the company’s plans to cut capital expenditure next year, as it reported a jump in third quarter profit.

Barclays also suffered heavy losses after it confirmed plans to sell its African business as it announced a drop in full year profit and a large cut to the dividend.

Market Movers

FTSE 100 (UKX) 6,147.61 0.83%
FTSE 250 (MCX) 16,789.49 1.12%
techMARK (TASX) 3,209.03 0.58%

FTSE 100 - Risers

London Stock Exchange Group (LSE) 2,866.00p 7.02%
Direct Line Insurance Group (DLG) 409.60p 5.40%
Legal & General Group (LGEN) 236.30p 4.10%
Worldpay Group (WI) (WPG) 298.60p 4.08%
Prudential (PRU) 1,305.00p 3.78%
Hargreaves Lansdown (HL.) 1,282.00p 3.47%
Aviva (AV.) 452.70p 3.31%
Old Mutual (OML) 175.50p 3.05%
Whitbread (WTB) 4,040.00p 3.03%
Land Securities Group (LAND) 1,039.00p 2.97%

FTSE 100 - Fallers

Ashtead Group (AHT) 844.50p -8.60%
Barclays (BARC) 158.10p -8.11%
Fresnillo (FRES) 938.00p -6.20%
Hikma Pharmaceuticals (HIK) 1,815.00p -3.51%
Randgold Resources Ltd. (RRS) 6,325.00p -2.47%
Glencore (GLEN) 130.50p -2.06%
Royal Bank of Scotland Group (RBS) 220.40p -1.56%
Antofagasta (ANTO) 490.40p -0.73%
BAE Systems (BA.) 510.00p -0.58%
AstraZeneca (AZN) 4,085.50p -0.52%

FTSE 250 - Risers

Greggs (GRG) 1,196.00p 15.56%
Rotork (ROR) 178.70p 12.04%
Allied Minds (ALM) 336.80p 11.49%
Serco Group (SRP) 101.80p 8.88%
Entertainment One Limited (ETO) 171.80p 8.67%
Drax Group (DRX) 246.70p 5.97%
Centamin (DI) (CEY) 97.60p 5.40%
Pets at Home Group (PETS) 279.10p 4.92%
Sophos Group (SOPH) 220.90p 4.69%
Vesuvius (VSVS) 313.50p 4.50%

FTSE 250 - Fallers

Lancashire Holdings Limited (LRE) 552.50p -6.44%
Ocado Group (OCDO) 247.00p -5.00%
International Personal Finance (IPF) 256.00p -4.44%
BGEO Group (BGEO) 1,920.00p -3.52%
St. Modwen Properties (SMP) 317.00p -3.00%
Paddy Power Betfair (PPB) 10,550.00p -2.31%
Enterprise Inns (ETI) 85.05p -2.30%
DFS Furniture (DFS) 312.10p -2.19%
Greencore Group (GNC) 373.20p -1.89%
Euromoney Institutional Investor (ERM) 891.00p -1.76%