Europe midday: Shares extend gains, pound up as UK's Johnson conditionally resigns

European shares extended gains on Thursday, with chipmakers gaining after positive earnings by South Korean electronics giant Samsung and the pound received a boost as UK Prime Minister Boris Johnson said he would stand down although he still planned to cling to power until the autumn.

The pan-regional Stoxx 600 index was up 1.38% in early deals with major bourses all higher. Investors were eyeing minutes from the European Central Bank for clues on rate hikes.

Britain’s FTSE 100 was up almost 1% despite political turmoil gripping the country. Prime Minister Boris Johnson is refusing to quit office despite more than 50 ministers resigning amid claims he misled them over his knowledge of sexual harassment allegations against an MP he promoted as an aide. The pound gained 0.5% against the dollar to $1.19 and 0.47% versus the euro at €1.17.

“Finally Boris Johnson appears to have given in to pressure from the wave of government resignations with reports suggesting that he will step down today," said Victoria Scholar, head of investments at Interactive Investor.

"The pound is pushing higher, hitting session highs inching closer back up to key psychological resistance at $1.20 a critical support level it broke below this week amid the political and economic uncertainty. The currency market is relieved that Johnson is finally resigning, removing some of the political uncertainty that was priced into the pound and paving the way for a new prime minister to replace the unpopular leader."

In equity news, semiconductor firms STMicroelectronics, BE Semiconductors, ASM International, ASML Holding all made gains after Samsung posted its best April-June profit since 2018, driven by strong memory chip sales to server customers.

Shares in Tenaris jumped 8% after Jefferies raised its price target on the stock.

UK housebuilders were in the red after Persimmon warned on higher building costs due to increases in wages and raw materials prices. However, it still expected annual profits to be “slightly” ahead of last year. Rivals Barratt and Berkeley were also lower on the news.

Gambling shares tanked after Entain said online revenues would be flat. Flutter and Evolution Gaming Group followed suit.

Reporting by Frank Prenesti at Sharecast.com