London midday: Stocks rally as Eurozone investor sentiment improves

UK equities rallied on Monday as a forward-looking survey showed Eurozone investor sentiment improved in December.

The Sentix investor confidence index for December rose from 15.1 to 15.7, slightly below analysts’ expectations for a 17 reading. It marked a first increase after two consecutive declines in the previous months, although it remained below the 16.8 average registered between June and August.

The report comes after European Central Bank President Mario Draghi on Thursday announced a cut to the deposit rate 10 basis points and extension to the quantitative easing programme until March 2017. Asset purchases were left at €60bn a month, to the surprise of analysts who had predicted an increase to around €75bn.

"Today’s trading is in sharp contrast to the post-Draghi plunge of last Thursday, and only so much can be attributed to an improved, but still lower than expected, region-wide Sentix investor confidence figure," said Connor Campbell, senior market analyst at Spreadex.

"No, instead it appears that the ECB president managed to reassure investors at the weekend when he trotted out a fresh riff on his usual ‘whatever it takes’ spiel, stating that ‘there cannot be any limit to how far we are willing to deploy our instruments…to achieve [the central bank’s] mandate’."

Investors also continued to process last week's better-than-expected US non-farm payrolls report ahead of the Federal Reserve's policy meeting this month. Analysts are expecting the Fed to raise interest rates in December on the back of further improvement in the labour market.

Fed policymaker James Bullard may provide hints on the central bank's next move when he speaks in Indiana at 1730 GMT.

Meanwhile, oil stocks were in the red after OPEC on Friday decided to keep production at current levels, as expected by the market . Royal Dutch Shell and BP were among the top fallers.

"Any optimism over a possible production cut diminished rapidly when the group failed to agree on a production ceiling, leaving current production at 31.5M barrels per day," said FXTM research analyst Lukman Otunuga.

"With concerns elevated around the aggressive oversupply in the markets, investor sentiment will remain haunted towards WTI Oil in the short-term and selling in the commodity will resume."

Brent crude fell 0.72% to $42.69 per barrel and West Texas Intermediate declined 1.4% to $39.38 per barrel at 1144 GMT.

In company news, RSA Insurance Group and Legal & General gained after they received UK regulatory approval to use their internal models to comply with the new European-wide Solvency II requirements to protect against financial shocks.

Serco slumped after the outsourcer said it expects revenue and trading profit to fall in 2016 partly due in part to the disposal of its offshore call centre, although underlying profit for 2015 is expected to be ahead of guidance.

Glencore advanced as it announced it will cut 180 jobs at its Collinsville mine in north Queensland, Australia, ABC News reported on Monday.

Hammerson jumped after Deutsche Bank reitered a 'buy' rating on the stock.

Man Group was given a boost after Citigroup upgraded the stock to ‘buy’ from ‘neutral’ and lifted the price target to 186p from 164p.

Market Movers

FTSE 100 (UKX) 6,265.18 0.43%
FTSE 250 (MCX) 17,442.47 0.43%
techMARK (TASX) 3,236.62 1.01%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 611.00p 2.78%
Associated British Foods (ABF) 3,580.00p 2.73%
Hammerson (HMSO) 617.50p 2.57%
Reckitt Benckiser Group (RB.) 6,336.00p 2.09%
Carnival (CCL) 3,519.00p 2.03%
Unilever (ULVR) 2,849.00p 2.01%
Inmarsat (ISAT) 1,131.00p 1.98%
ITV (ITV) 273.20p 1.98%
Land Securities Group (LAND) 1,228.00p 1.82%
easyJet (EZJ) 1,705.00p 1.79%

FTSE 100 - Fallers

Royal Dutch Shell 'B' (RDSB) 1,555.50p -2.75%
Royal Dutch Shell 'A' (RDSA) 1,547.50p -2.40%
BP (BP.) 351.60p -2.25%
BG Group (BG.) 1,005.00p -1.95%
Kingfisher (KGF) 347.60p -1.64%
BHP Billiton (BLT) 778.70p -1.14%
Tesco (TSCO) 160.95p -1.01%
Antofagasta (ANTO) 487.20p -0.92%
Morrison (Wm) Supermarkets (MRW) 146.40p -0.81%
Centrica (CNA) 209.70p -0.80%

FTSE 250 - Risers

AO World (AO.) 171.80p 5.40%
Clarkson (CKN) 2,438.00p 4.28%
CLS Holdings (CLI) 1,719.00p 3.18%
Bwin.party Digital Entertainment (BPTY) 111.00p 2.68%
Shawbrook Group (SHAW) 357.50p 2.49%
Home Retail Group (HOME) 109.00p 2.44%
Kaz Minerals (KAZ) 101.80p 2.26%
Wizz Air Holdings (WIZZ) 1,717.00p 2.20%
Allied Minds (ALM) 452.50p 2.19%
Computacenter (CCC) 842.00p 2.18%

FTSE 250 - Fallers

Serco Group (SRP) 106.50p -6.82%
Premier Oil (PMO) 61.00p -6.15%
Entertainment One Limited (ETO) 196.30p -5.53%
Tullow Oil (TLW) 178.70p -5.10%
Petrofac Ltd. (PFC) 771.50p -4.87%
Hunting (HTG) 309.20p -4.09%
Ophir Energy (OPHR) 91.40p -3.79%
Wood Group (John) (WG.) 532.00p -3.62%
Vedanta Resources (VED) 347.80p -3.31%
Amec Foster Wheeler (AMFW) 403.50p -3.31%