London midday: Stocks keep pushing higher ahead of US data

Come midday London's top-flight index was headed for its largest gain in six weeks, egged on by ‘dovish’ comments from the European Central Bank's chief economist and strong gains on Wall Street in the previous session which some market commentary described as “extremely resilient”, although they came on very thin trading volumes.

Nevertheless, the weekend's tragic events in France and their potential implications were still very much front and centre on investors' minds.

As of 12:07 the FTSE 100 was 110.97 points higher versus Monday's close, trading at 6,257.36.

French Prime Minister Manuel Valls echoed remarks by President Hollande invoking the need for increased security spending as justification for increased government spend above and beyond what was permitted by Brussels.

In parallel to meetings between US Secretary of State John Kerry, in Paris, Russian president Vladimir Putin attributed the downing of the Metrojet flight 9268 over the Sinai peninsula on 31 October to Islamic terrorists, vowing to “finding and punishing the perpetrators”.

Analysts diverge on medium-term implications of Paris attacks

“Other recent attacks, including those on Beirut and the downing of a Russian airliner over Egypt, show that 'geopolitical risk' is a growing downside risk to global growth. Therefore, any comparison with previous terrorist attacks such as in Madrid in 2004 and in London in 2005 "is not necessarily relevant",” Barclays analyst Philippe Gudin said in a research report sent to clients.

"Longer-term effects are more uncertain, especially given the high uncertainty regarding the reaction of the international community and its ability to strengthen cooperation in the fight against terrorism,” Gudin added.

Analysts at Citi seemed less wary, telling clients that: "Economic consequences will likely be modest — On the negative side, household confidence will likely be affected and a number of shopping days could be lost. On the positive side, we expect extra spending on policing, private security and military intervention."

CPI in line with forecasts

Consumer prices in the UK slipped by 0.1% year-on-year in October, the same as last month and as economists had expected.

The rate of gains in ‘core’ prices edged higher to 1.1% year-on-year (consensus: 1.0%), but economists at Barclays cautioned “against reading too much into the uptick in core inflation which we think was mainly due to technical factors rather than signalling the beginning of an upward medium-term trend in non-energy industrial goods prices.”

Over on the Continent, the ECB's chief economist, Peter Praet, told Bloomberg the central bank had to be careful that inflation expectations did not fall too low, thus coming unhinged. This was taken as a hint at the possibility of further monetary stimulus.

US data on consumer prices and industrial production were scheduled for release at 13:30 and 14:15.

FTSE 100: Smiths Group paces gains

Sales at Smiths Group declined 4% in the first quarter, as weakness in its oil and gas market was not quite made up by solid trading in detection and medical. However, the company's new chief saw "clear potential" for operational improvements across the business. Panmure Gordon estimated the value of the increased cash flow resulting from the “material change” in the firm’s pension funding structure at £270m or 68p per share.

EasyJet posted an 18% rise in full year pre-tax profit as revenue and passenger numbers grew, as it expressed confidence over the long-term outlook for the business. For the twelve months to the end of September, pre-tax profit came in at £686m from £581m, on revenue of £4.69bn, up 3.5% from last year.

British Land said its its net asset value was 7.5% ahead at 891p at the half-year stage with underlying pre-tax profits up 10.3% at £171m driven by successful leasing activity and lower financing costs. “Looking forward, we remain positive about occupational demand in our markets which is supported by UK economic performance. We are, of course, mindful of increased volatility in a number of capital markets which could adversely impact our investment markets,” said chief executive Chris Grigg.

Discounters Aldi and Lidl have reached a combined share of 10% of the British grocery market for the first time, while Sainsbury's became the first major supermarket to claim a market share increase for over a year, according to Kantar.

FTSE 250: US outfit swoops in on London-listed rival

Liberty Global reached an agreement on Monday to purchase Cable&Wireless Communications in a cash and stock deal valuing the carrier at £3.5bn ($5.3bn). The transaction – which valued the London-listed carrier at 10.7 operating earnings – was set to extend the reach of his enterprise further into Latin America.

Ophir Energy surged after Credit Suisse upped its stance on the stock to ‘neutral’ from ‘underperform’ and lifted the price target to 100p from 90p following the capital markets day.

Despite challenging market conditions and a dip in revenue over the last four months, Bodycote said it is on track to meet full-year profit expectations, sending the share price surging. The company said that group revenue for the four months was down 7.5% at constant exchange rates compared to the same period in 2014. However, foreign exchange meant that revenues were actually down 9.7% for the period.

Residential developer Crest Nicholson said its growth strategy remains on track, after it reported an increase in housing volumes this year. In a trading update released on Tuesday, the FTSE 250 group said it delivered 2,725 units in the year to the end of October, an 8% year-on-year increase.

Safety, health and environmental technology group Halma said first half pre-tax profits rose 5% £64.2m, while revenues were up 11% to £380m. Organic revenue growth at constant currency improved 7%, while adjusted profit before tax was advanced to £74.7m from £69 a year earlier.

Market Movers

FTSE 100 (UKX) 6,255.64 1.78%
FTSE 250 (MCX) 17,045.46 1.19%
techMARK (TASX) 3,130.91 1.58%

FTSE 100 - Risers

Smiths Group (SMIN) 1,006.00p 8.70%
Rolls-Royce Holdings (RR.) 548.00p 3.79%
Old Mutual (OML) 198.40p 3.55%
Whitbread (WTB) 4,555.00p 3.55%
Sainsbury (J) (SBRY) 251.00p 3.21%
BG Group (BG.) 1,008.50p 3.17%
St James's Place (STJ) 976.00p 3.17%
Prudential (PRU) 1,515.50p 3.10%
Royal Dutch Shell 'B' (RDSB) 1,635.00p 2.96%
Intertek Group (ITRK) 2,638.00p 2.93%

FTSE 100 - Fallers

easyJet (EZJ) 1,702.00p -4.54%
Anglo American (AAL) 444.80p -2.03%
Randgold Resources Ltd. (RRS) 3,968.00p -1.49%
Fresnillo (FRES) 672.50p -0.22%
Glencore (GLEN) 89.38p -0.18%
SABMiller (SAB) 4,015.00p -0.04%
RSA Insurance Group (RSA) 437.00p 0.09%
Rio Tinto (RIO) 2,226.50p 0.25%
Antofagasta (ANTO) 476.50p 0.25%
Morrison (Wm) Supermarkets (MRW) 154.10p 0.26%

FTSE 250 - Risers

Bodycote (BOY) 537.00p 7.81%
Halma (HLMA) 810.00p 7.14%
Kaz Minerals (KAZ) 81.50p 6.82%
Atkins (WS) (ATK) 1,453.00p 6.68%
Cable & Wireless Communications (CWC) 78.65p 6.64%
Ophir Energy (OPHR) 95.15p 6.61%
Aggreko (AGK) 979.00p 6.24%
Spirax-Sarco Engineering (SPX) 3,027.00p 4.09%
Enterprise Inns (ETI) 98.65p 3.84%
Investec (INVP) 511.50p 3.61%

FTSE 250 - Fallers

B&M European Value Retail S.A. (DI) (BME) 307.80p -3.69%
Petra Diamonds Ltd.(DI) (PDL) 54.15p -2.78%
Diploma (DPLM) 700.50p -2.16%
Euromoney Institutional Investor (ERM) 943.00p -1.77%
Fidessa Group (FDSA) 1,918.00p -1.69%
Ted Baker (TED) 3,400.00p -1.68%
TalkTalk Telecom Group (TALK) 238.70p -1.36%
Homeserve (HSV) 414.10p -1.36%
Jimmy Choo (CHOO) 151.10p -1.24%
Tullow Oil (TLW) 188.00p -1.16%