London close: Miners lead gains after long Easter break

London's stock markets closed in positive territory on Tuesday, as investors returned from the four-day Easter weekend.

Major miners led the gains on the top-flight index, with Glencore in focus amid developments in its potential takeover by Canada’s Teck Resources.

The FTSE 100 rose 0.57% to close at 7,785.72, and the FTSE 250 added 0.85% to end the day at 18,956.05.

Sterling meanwhile turned in a mixed performance, last rising 0.2% on the dollar to trade at $1.2407, while it weakened 0.2% against the euro to change hands at €1.1378.

“European stock indices continued to rise on Tuesday, despite the IMF expecting global growth to slow from 3.4% in 2022 to a downwardly-revised 2.8% this year,” said IG senior market analyst Axel Rudolph.

“US equity indices traded flat to slightly negative ahead of Wednesday's US FOMC minutes and March inflation report which are to guide investors ahead of the start of the first-quarter earnings season, which kicks off on Friday.”

Retail spending rises, though consumers go out less

In economic news, UK retail spending increased on an annual basis in March, driven by Mother's Day purchases, despite consumers staying at home due to the cost-of-living crisis and wet weather.

According to the British Retail Consortium (BRC), retail spending grew by 5.1% year-on-year in March, down slightly from 5.2% in February, while like-for-like sales rose by 4.9%, the same as the previous month.

"While the wettest March in over forty years dampened sales growth for fashion, gardening and DIY products, Mother's Day brightened up sales for the month," said BRC chief executive Helen Dickinson, adding that jewellery, flowers and fragrances were big-selling items.

However, the UK economy was expected to be the worst-performing among the G7 economies this year, according to the International Monetary Fund's (IMF) latest forecasts.

The IMF said it expected the UK economy to shrink by 0.3% this year, up from its previous estimate of a 0.6% contraction, and then grow by 1% in 2024.

It cited high inflation, which is currently at 10.4%, and the selloff in UK bonds following the mini budget in September as reasons for the UK's underperformance.

IMF chief economist Pierre-Olivier Gourinchas said the world was entering "a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner".

He added that below the surface, "turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.

"Inflation is much stickier than anticipated even a few months ago - while global inflation has declined, that reflects mostly the sharp reversal in energy and food prices.

“But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”

On the continent, eurozone retail sales fell by 0.8% in February, in line with market expectations, according to Eurostat.

Automotive fuel sales decreased by 1.8%, while non-food product sales declined by 0.7%, and food, drink, and tobacco sales fell by 0.6%.

Sales were down by 3% year-on-year in February, compared to a consensus estimate of a 3.5% drop.

Investor sentiment in the eurozone meanwhile improved more than expected in April, with the Sentix investor sentiment index rising to -8.7 from -11.1 in March.

The current situation index improved to -4.3 in April from -9.3 the previous month, while the expectations gauge remained unchanged at -13.0.

Across the Atlantic, the US National Federation of Independent Business' small business optimism index fell to a three-month low of 90.1 in March, down from 90.9 in February.

The index had remained below its 49-year average of 98 for 15 consecutive months, with small business owners expressing concerns about the future of economic conditions in the US, particularly inflation.

Finally on data, China's consumer price inflation slowed to 0.7% year-on-year in March - the lowest level since September 2021 - while food price inflation decreased to 2.4% from 2.6% in February.

Non-food prices rose by 0.3% YoY in March, down from 0.6% in February, and producer price inflation fell by 2.5% in March, marking the fastest pace of decline since June 2020, in line with expectations.

Miners lead gains, Cineworld tumbles on US reorganisation plans

On London’s equity markets, heavily-weighted mining stocks were in the green, with Antofagasta, Rio Tinto Group, Anglo American, and Glencore all posting gains.

Glencore specifically rose 3.26% after reports that its CEO Gary Nagle was set to meet with some of Teck Resources' Canadian shareholders to lobby for support for its proposed takeover.

Elsewhere, housebuilders Persimmon, Taylor Wimpey, and Barratt Developments also rose, boosted by a Barclays upgrade for Persimmon to 'equalweight' from 'underweight'.

Meanwhile, BP rose slightly after signing a deal with Harbour Energy to develop the Viking carbon capture transportation and storage project in the Humber region.

On the downside, Hilton Food Group, Premier Foods, and JD Wetherspoon all fell due to retail industry data showing people were eating out less amid the cost-of-living crisis.

Cineworld Group saw a significant drop, falling 37.83% after filing a reorganisation plan with the US Bankruptcy Court that does not provide any recovery for its existing shareholders.

TUI was also lower despite being upgraded by Citi to 'neutral' from 'sell', as its share price continued to decline alongside higher-than-expected dilution due to a rights issue.

Reporting by Josh White for Sharecast.com.