London close: Stocks rise as geopolitical and trade tensions wane

London stocks finished higher as the pound fell to its worst level in five weeks against the dollar, as an easing in geopolitical and trade tensions and optimism around the outlook for corporate earnings in the States and in euroland buoyed stockmarkets around the world.

All of the above also helped to offset the impact of rising government bond yields on shares' valuations.

By the closing bell, the FTSE 100 was up by 0.42% or 30.70 points to 7,398.87, while the pound was ahead by 0.25% versus the euro at 1.1422 but 0.35% weaker versus the greenback at 1.3953, weighed down by reports of a potential cabinet revolt.

That followed a bruising week where sterling was hammered by disappointing wage growth, inflation and retail sales data and dovish comments from Bank of England governor Mark Carney.

Earlier Spreadex analyst Connor Campbell had said: "One could argue the FTSE had to work hard not to post any growth this Monday, given that it has so many factors in its favour.

"Not only was there the easing of macro-political tensions on two fronts - North Korea’s nuclear retreat, and the reduced chances of a US-China trade war - but a soft showing from sterling. The pound, like the euro, dropped half a percent against the dollar as rising US bond yields got rate hike hawks all hot under the collar."

Also helping to boost investor sentiment, equity strategists at JP Morgan sounded a positive note on the outlook for stocks on Monday.

Mislav Matejka and his team told clients that US and euro area corporate results were set to deliver a positive surprise in the mid single digits versus the 9% increase that analysts were forecasting for the first quarter.

In the case of the US, that excluded the administration's recently-enacted tax cuts.

"We expect stocks to keep rebounding, bond yields to move back higher and Cyclicals to lead over Defensives, helped by the likely stabilisation in activity momentum. The Q1 reporting season has started and we believe that it will provide another fundamental support for the market," Matejka said.

Analysts at Deutsche Bank on the other hand were more cautious, although they did bump up their view on UK stocks from 'benchmark' to 'overweight' as they moved towards a more defensive asset allocation by countries overall.

Linked to the above, overnight the yield on the benchmark 10-year US Treasury note had grazed the psychological 3% mark.

In corporate news, outsourcer Capita surged as investors liked the sound of its new strategy that comes on the back of a "significant deterioration" in new business wins and a £513m annual loss before tax.

Smith & Nephew was top of the blue chip pile as Dutch giant Philips' first-quarter results revealed strong growth in medical equipment, which was music to the ears of the London-listed maker of artificial shoulders, knees and possibly toes.

Wealth manager St James Place was up ahead of an update on its performance due on Tuesday.

Shares in Whitbread edged lower after a Sunday Times report suggesting that chief executive Alison Brittain is open to the idea of spinning off Costa Coffee from Premier Inn hotels.

BHP Billiton was up after saying that Brazil's federal court has allowed it to have more time to complete negotiations regarding the public civil claims related to the Samarco dam failure.

Industrial pump manufacturer Rotork rallied after posting a 10.2% jump in first-quarter revenue, with order intake up 21% thanks to more favourable market trends and the receipt of several significant orders.

Morgan Advanced Materials gained after reporting a 6.5% rise in sales for the first three months to March on an organic constant currency compared to the first quarter of last year.

Elsewhere, Shire was in the black after saying late on Friday that it was considering a sweetened offer from Japan's Takeda Pharmaceutical, while Workspace advanced after announcing the acquisition of two further Centro buildings in Camden for £76.5m in cash.

That was ahead of the company's AGM on Tuesday.

On the downside, FTSE 250 shipping services provider Clarkson sank after warning that both first-half and full-year profits are now expected to be "materially below" the previous year following a number of headwinds in the first quarter.

Private healthcare operator NMC Health retreated after saying it has launched an offering of senior, unsecured, guaranteed convertible bonds due 2025.

Anglo-South African financial services provider Old Mutual was higher as it revealed that its Old Mutual Wealth business is expecting to list on the London Stock Exchange as Quilter in June. A prospectus published on Monday confirmed the planned listing for 25 June, coming on the same day the South African rand took a battering, falling 1.4% against the pound to 17.1898 ZAR.

Great Portland Estates fell after it sold the freehold of 78/92 Great Portland Street and 15/19 Riding House Street to M&G Real Estate and secured a "substantial" pre-let of its Hannover Square development.

On the broker note front, Marks & Spencer was boosted by an upgrade to 'neutral' from 'underperform' by Credit Suisse, but consumer goods giant Reckitt Benckiser was hit by a downgrade to 'market perform' at Raymond James and a target price cut at JPMorgan.

RSA Insurance was initiated at 'hold' by Jefferies, while Weir was on the front foot as RBC Capital Markets upped its price target and reiterated its 'outperform' rating.

Market Movers

FTSE 100 (UKX) 7,398.87 0.42%
FTSE 250 (MCX) 20,316.37 0.47%
techMARK (TASX) 3,445.39 0.72%

FTSE 100 - Risers

St James's Place (STJ) 1,148.50p 3.33%
Smith & Nephew (SN.) 1,389.00p 2.74%
Old Mutual (OML) 249.40p 2.72%
Experian (EXPN) 1,643.00p 2.09%
Vodafone Group (VOD) 213.95p 1.88%
Pearson (PSON) 797.20p 1.68%
Rentokil Initial (RTO) 291.50p 1.61%
easyJet (EZJ) 1,627.50p 1.56%
Smith (DS) (SMDS) 515.40p 1.50%
British American Tobacco (BATS) 3,754.50p 1.47%

FTSE 100 - Fallers

NMC Health (NMC) 3,566.00p -3.47%
Bunzl (BNZL) 2,075.00p -2.58%
WPP (WPP) 1,118.00p -2.49%
National Grid (NG.) 796.50p -2.02%
Reckitt Benckiser Group (RB.) 5,513.00p -1.99%
Fresnillo (FRES) 1,272.50p -1.96%
United Utilities Group (UU.) 703.80p -1.87%
GKN (GKN) 459.90p -1.71%
Rolls-Royce Holdings (RR.) 852.40p -1.59%
Severn Trent (SVT) 1,860.00p -1.14%

FTSE 250 - Risers

Capita (CPI) 180.80p 13.14%
Rotork (ROR) 331.60p 10.94%
Hikma Pharmaceuticals (HIK) 1,261.00p 4.14%
Euromoney Institutional Investor (ERM) 1,306.00p 3.65%
Essentra (ESNT) 452.60p 3.49%
Diploma (DPLM) 1,230.00p 3.45%
Lancashire Holdings Limited (LRE) 595.50p 3.39%
Petrofac Ltd. (PFC) 619.20p 3.27%
TI Fluid Systems (TIFS) 260.00p 3.17%
IMI (IMI) 1,103.00p 3.09%

FTSE 250 - Fallers

Clarkson (CKN) 2,549.90p -17.87%
Woodford Patient Capital Trust (WPCT) 75.70p -10.94%
Capital & Counties Properties (CAPC) 277.40p -3.25%
Hochschild Mining (HOC) 213.00p -3.18%
Card Factory (CARD) 240.40p -2.67%
FirstGroup (FGP) 113.50p -2.16%
Spire Healthcare Group (SPI) 239.00p -2.13%
Melrose Industries (MRO) 224.50p -2.05%
BCA Marketplace (BCA) 183.00p -2.03%
Vietnam Enterprise Investments (DI) (VEIL) 465.00p -1.89%