London close: Stocks jump on central bank stimulus

Strong gains from in the retail sector outweighed falls from energy stocks on Monday, as UK equities recovered strongly after their worst weekly performance so far this year.

The FTSE 100 finished the session up 0.94% at 6,804.08 after dropping 2.5% last week.

Despite the strong gains, oil and gas producers were limiting upside as crude prices slid sharply. US oil futures were down as much as 4.4% at a fresh six-year low if $42.85 a barrel during intraday trade as investors reacted to speculation of more Iranian oil exports hitting the market and data that showed rising stockpiles at a key US storage hub.

Analyst David Madden from IG said that UK markets were driven higher by easing measures in Europe, as the European Central Bank (ECB) revealed its spent €9.751bn buying bonds in the first week of its new quantitative easing (QE) programme.

"As strong as the London market is, it is playing second fiddle to Continental Europe as the early days of the ECB QE scheme is sending Eurozone equity markets soaring," Madden said.

Frankfurt's DAX benchmark index in particular jumped 2.2% to 12,167.71, smashing through the 12,000 barrier for the first time in history.

Hopes for further stimulus in Beijing also lifted sentiment after Chinese Premier Li Keqiang said at the National People's Congress on Sunday that the government is ready to boost the private sector and domestic demand if growth continues to ease.

“The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth. We still have more tools in our toolbox,” he said.

The economic data calendar was relatively quiet on Monday, as the focus remains on the upcoming Federal Reserve decision and UK Budget on Wednesday. As for the Fed meeting, investors will be waiting to see whether policymakers drop the term 'patient' from their guidance about the timing of interest rates.

Supermarkets jump, CRH and Tullow slump

Grocery giant Tesco rose strongly on speculation that WPP has made an offer for a majority stake in its Dunnhumby business, which developed its Clubcard loyalty scheme, to bolster its consumer behaviour knowledge. Bloomberg cited a source saying that Tesco is asking for £2bn for the entire division, which has also attracted interest from Warburg Pincus, Carlyle Group and TPG.

Sainsbury's jumped as investors awaited the grocer's fourth-quarter trading update on Tuesday. Morrisons was also higher.

Energy stocks such as Tullow Oil and BP were tracking crude prices lower, though Tullow was the standout faller, dropping 6% after a target price cut at Exane BNP Paribas.

Astrazeneca edged higher, erasing earlier losses, as its much-anticipated Pegasus study of its Brilinta treatment found that the drug reduced the chances of another heart attack or stroke in patients, though it did increase bleeding.

Mining stocks were mixed, with Anglo American and Glencore trading lower and BHP Billiton and Rio Tinto registering gains. Even Antofagasta was in demand despite reports that the copper miner may have to close it Los Pelambres project in Chile after a court ruling last week to destroy a tailings dam wall at the site on environmental concerns.

Market Movers
techMARK 3,220.42 +0.87%
FTSE 100 6,804.08 +0.94%
FTSE 250 17,200.95 +0.53%

FTSE 100 - Risers
Sainsbury (J) (SBRY) 268.60p +3.67%
Tesco (TSCO) 241.35p +3.65%
Kingfisher (KGF) 367.00p +3.47%
Next (NXT) 7,555.00p +2.79%
TUI AG Reg Shs (DI) (TUI) 1,200.00p +2.74%
Hargreaves Lansdown (HL.) 1,149.00p +2.59%
Marks & Spencer Group (MKS) 506.00p +2.51%
Burberry Group (BRBY) 1,890.00p +2.49%
Imperial Tobacco Group (IMT) 3,169.00p +2.36%
Aberdeen Asset Management (ADN) 461.70p +2.30%

FTSE 100 - Fallers
Tullow Oil (TLW) 281.20p -5.73%
CRH (CRH) 1,731.00p -4.42%
Sports Direct International (SPD) 641.50p -2.36%
Experian (EXPN) 1,115.00p -1.33%
Royal Bank of Scotland Group (RBS) 351.50p -1.32%
Ashtead Group (AHT) 1,097.00p -0.90%
Weir Group (WEIR) 1,781.00p -0.39%
WPP (WPP) 1,558.00p -0.38%
RSA Insurance Group (RSA) 419.50p -0.24%
BP (BP.) 417.60p -0.16%

FTSE 250 - Risers
Ted Baker (TED) 2,739.00p +6.12%
Just Eat (JE.) 363.30p +4.70%
Provident Financial (PFG) 2,766.00p +4.65%
Brown (N.) Group (BWNG) 345.10p +3.82%
Card Factory (CARD) 280.80p +3.58%
TalkTalk Telecom Group (TALK) 348.90p +3.44%
AL Noor Hospitals Group (ANH) 1,010.00p +3.27%
Beazley (BEZ) 295.10p +3.18%
Investec (INVP) 586.00p +3.08%
Britvic (BVIC) 762.50p +3.04%

FTSE 250 - Fallers
Afren (AFR) 3.74p -19.57%
Vedanta Resources (VED) 447.60p -8.03%
Premier Oil (PMO) 120.20p -7.54%
Serco Group (SRP) 171.00p -6.20%
Nostrum Oil & Gas (NOG) 550.50p -6.06%
AO World (AO.) 182.10p -4.96%
Ocado Group (OCDO) 370.90p -4.53%
Pace (PIC) 362.20p -4.51%
Drax Group (DRX) 360.50p -4.45%
Infinis Energy (INFI) 187.20p -4.39%