London close: Stocks end higher on M&A news while ECB disappoints

London stocks erased some of their early gains on Thursday after the European Central Bank shot down hopes of further quantitative easing.

The FTSE 100 ended up 0.18% to 6,858.70 points.

Micro Focus International topped the FTSE 100 after agreeing a $8.8bn merger with Hewlett Packard’s software business lifted investor sentiment. The UK company will issue American Depository Shares to shareholders in Hewlett Packard Enterprise, which was spun out of its more famous hardware parent in October 2015, so that once the deal is complete the US corporation's shareholders will own 50.1% of the combined entity, with both companies remaining listed.

“The initial positive reaction across every sector of the FTSE 100 to the Micro Focus deal was because it’s a good sign for the continued growth of UK business and technology post-Brexit. British firms still have the confidence to buy overseas assets despite the drop in Sterling,” said CMC Markets analyst Jasper Lawler.

However, the FTSE scaled back its rally somewhat after the ECB said it hadn’t discussed expanding its asset purchase programme. The central bank decided to keep the monthly asset purchases at €80bn until March 2017 and also left all key interest rates unchanged.

The ECB downgraded its economic growth and inflation forecasts for 2017 in light of Brexit but said the changes to its estimates were “not substantial enough to warrant a change in policy”.

Elsewhere, China data showed exports fell 2.8% in August, compared to economists’ estimates for a 4.0% decline and the previous month’s 4.4% decrease. Imports rose 1.5%, exceeding forecasts for a 5.7% drop and following a 12.5% slide in July, the General Administration of Customs revealed.

The trade surplus came to $53.05bn last month, down from $52.31bn in July, although below economists’ forecasts of $59.40bn.

In the US, data from the Labor Department showed jobless claims unexpectedly fell to a two-month low last week. Initial jobless claims dropped by 4,000 to 259,000 in the week to 3 September, surprising analysts who had predicted claims would rise to 265,000 from an unrevised 263,000 the previous week.

Closer to home, Chancellor Phillip Hammond announced he would deliver his first Autumn Statement on 23 November. It will reveal the government's taxation and spending plans as well as its assessment of the UK economy in the wake of Brexit.

In other UK news, the Royal Institution for Chartered Surveyors said in a report that confidence in the housing market has recovered moderately from its post-Brexit wobbles but numbers of both buyers and sellers remained in negative territory.

The August residential housing market survey showed a slight increase in its past-price indicator after falling for five months in a row, with a balance of 12% more surveyors reporting an increase in prices, up from 5% previously.

Meanwhile, oil prices jumped after data from the Energy Information Administration showed weekly crude inventories fell 14.5m barrels to 511.4m barrels last week.

Earlier, China data showed crude oil imports rose to their highest level of the year in August. Data from the American Petroleum Institute fuelled the rally after revealing a 2.1 million-barrel drop in inventories

Brent crude gained 3.3% to $49.64 per barrel and West Texas Intermediate edged up 3.5% to $47.16 per barrel at 1653 BST.

In company news, education publisher Pearson was under the cosh after US peer John Wiley & Sons slid nearly 7% on Wednesday following the release of disappointing first-quarter results.

Admiral and Standard Life were in the red as they went ex-dividend.

Airline stocks IAG and EasyJet flew higher after EZJ’s chief executive officer Carolyn McCall said financial markets had overreacted to the UK’s decision to leave the European Union.

Dixons Carphone advanced after it said group revenue in the first quarter grew 9% on the year, while like-for-like revenue improved 4% in the 13 weeks to 30 July.

Rio Tinto gained after RBC Capital Markets bumped the stock up to ‘outperform’ form ‘sector perform' saying it provides the most attractive valuation in the sector, along with “best in class” growth.

Thomas Cook was flying higher as it launched its joint-venture with Chinese conglomerate Fosun in Shanghai called Thomas Cook China, which will offer 90 high-end holiday packages to more than 40 international and domestic destinations.

CMC Markets continued its fall after warning n Wednesday that first half profits would be lower than last year due to what it said was a lower value of client trades on depressed levels of market volatility.

Market Movers

FTSE 100 (UKX) 6,858.70 0.18%
FTSE 250 (MCX) 18,194.08 0.74%
techMARK (TASX) 3,492.94 0.57%

FTSE 100 - Risers

Micro Focus International (MCRO) 2,243.00p 14.73%
International Consolidated Airlines Group SA (CDI) (IAG) 422.10p 3.97%
Dixons Carphone (DC.) 389.00p 3.96%
easyJet (EZJ) 1,197.00p 3.73%
Provident Financial (PFG) 3,044.00p 2.91%
Royal Bank of Scotland Group (RBS) 202.10p 2.59%
Anglo American (AAL) 858.90p 2.23%
Lloyds Banking Group (LLOY) 58.86p 2.15%
Barclays (BARC) 173.05p 1.94%
BHP Billiton (BLT) 1,015.50p 1.65%

FTSE 100 - Fallers

Pearson (PSON) 797.00p -7.70%
Mediclinic International (MDC) 964.50p -3.31%
Burberry Group (BRBY) 1,285.00p -2.36%
Admiral Group (ADM) 2,011.00p -2.33%
Rolls-Royce Holdings (RR.) 750.00p -2.22%
Whitbread (WTB) 4,184.00p -1.71%
GKN (GKN) 320.40p -1.42%
Standard Life (SL.) 356.50p -1.36%
Hikma Pharmaceuticals (HIK) 2,149.00p -1.29%
Fresnillo (FRES) 1,697.00p -1.28%

FTSE 250 - Risers

Micro Focus International (MCRO) 2,243.00p 14.73%
Thomas Cook Group (TCG) 76.05p 6.14%
International Personal Finance (IPF) 288.90p 5.25%
ICAP (IAP) 497.80p 5.09%
Sophos Group (SOPH) 262.00p 4.93%
Intermediate Capital Group (ICP) 636.50p 4.52%
Aldermore Group (ALD) 175.90p 4.08%
Marshalls (MSLH) 310.00p 3.92%
TalkTalk Telecom Group (TALK) 210.00p 3.91%
BGEO Group (BGEO) 3,119.00p 3.83%

FTSE 250 - Fallers

NMC Health (NMC) 1,368.00p -2.98%
Phoenix Group Holdings (DI) (PHNX) 848.50p -2.81%
CMC Markets (CMCX) 236.30p -2.76%
Hastings Group Holdings (HSTG) 214.20p -2.59%
Polymetal International (POLY) 1,049.00p -2.24%
Dechra Pharmaceuticals (DPH) 1,354.00p -2.17%
Genus (GNS) 1,913.00p -1.95%
Meggitt (MGGT) 471.10p -1.90%
NCC Group (NCC) 325.90p -1.78%
Regus (RGU) 295.00p -1.60%