London close: Stocks rise as China eases Covid restrictions

London stocks ended firmly in the black on Tuesday, with investors in a cheerier mood after China eased Covid quarantine restrictions.

The FTSE 100 closed up 0.9% at 7,323.41.

David Madden, market analyst at Equiti Capital, said: "Overnight, China eased its restrictions relating to Covid-19 as case numbers are falling. Even though the country still has measures in place, the move is interpreted as a sign that things are moving in the right direction, which has lifted sentiment across the board as stocks, oils and industrial metals are higher."

In equity markets, engine maker Rolls-Royce was the standout gainer, with traders pointing to an upbeat note on the stock by Morgan Stanley.

Shell and BP gushed higher as oil prices rose, while miners also gained amid higher commodity prices.

Energy services company Petrofac rallied as it said trading and expectations were in line with guidance, adding that its engineering and construction division was set to secure strong order intake in the second half and deliver backlog growth year on year.

On the downside, Pennon slumped after it said that water regulator Ofwat will be including South West Water in its investigation into how water and wastewater companies manager their wastewater treatment works. Severn Trent and United Utilities were also in the red, with a note on the sector by JPMorgan Cazenove also having an impact.

JPM downgraded Severn Trent to ‘underweight’ from ‘neutral’.

"The UK water sector has performed well since the start of the regulatory period on 1 April 2020, with all three listed companies delivering strong returns and asset growth, while maintaining dividend growth at least in line with inflation," it said.

"However, we are turning cautious on the subsector, given our belief that returns from April 2025 will be lower than the market currently expects."

It put Severn Trent and Pennon on "negative Catalyst Watch" into July 7th, when regulator Ofwat is due to publish a draft methodology for the next regulatory period.

Market Movers

FTSE 100 (UKX) 7,323.41 0.90%
FTSE 250 (MCX) 19,351.27 0.17%
techMARK (TASX) 4,336.92 -0.05%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 87.14p 6.52%
Prudential (PRU) 1,052.50p 4.31%
BT Group (BT.A) 192.30p 3.97%
BAE Systems (BA.) 826.60p 3.51%
Harbour Energy (HBR) 374.30p 3.08%
Shell (SHEL) 2,177.00p 3.05%
Unite Group (UTG) 1,139.00p 2.89%
Whitbread (WTB) 2,644.00p 2.52%
Standard Chartered (STAN) 620.60p 2.44%
British Land Company (BLND) 507.20p 2.32%

FTSE 100 - Fallers

Severn Trent (SVT) 2,742.00p -3.89%
Aveva Group (AVV) 2,379.00p -2.86%
Flutter Entertainment (CDI) (FLTR) 8,506.00p -2.57%
Entain (ENT) 1,304.00p -2.36%
Halma (HLMA) 1,996.00p -1.96%
B&M European Value Retail S.A. (DI) (BME) 379.70p -1.96%
Intermediate Capital Group (ICP) 1,390.00p -1.94%
M&G (MNG) 198.20p -1.39%
Rightmove (RMV) 571.00p -1.25%
Rentokil Initial (RTO) 483.00p -1.21%

FTSE 250 - Risers

Babcock International Group (BAB) 320.00p 6.24%
Hammerson (HMSO) 21.13p 3.02%
Elementis (ELM) 104.80p 2.95%
Convatec Group (CTEC) 229.80p 2.68%
Carnival (CCL) 780.80p 2.55%
Petrofac Ltd. (PFC) 122.00p 2.52%
NB Private Equity Partners Ltd. (NBPE) 1,495.00p 2.40%
Great Portland Estates (GPE) 636.00p 2.33%
ITV (ITV) 69.34p 2.33%
BMO Commercial Property Trust Limited (BCPT) 117.00p 2.27%

FTSE 250 - Fallers

Pennon Group (PNN) 1,007.00p -5.89%
Dr. Martens (DOCS) 251.80p -4.19%
Renishaw (RSW) 3,694.00p -3.90%
HGCapital Trust (HGT) 342.50p -3.79%
Essentra (ESNT) 263.50p -3.13%
Baltic Classifieds Group (BCG) 136.80p -3.12%
Blackrock Throgmorton Trust (THRG) 565.00p -2.92%
Darktrace (DARK) 329.00p -2.63%
Quilter (QLT) 107.60p -2.54%
IntegraFin Holding (IHP) 239.40p -2.37%