London midday: Stocks rise on growth in UK manufacturing and industrial output

London stocks rose after reports showed better-than-expected growth in UK manufacturing and industrial output in August.

Manufacturing output climbed 0.5% month-on-month in August compared with a 0.8% decline in July and with analysts’ expectations for a 0.3% gain, the Office for National Statistics revealed. The rebound was buoyed by increased car production.

Industrial output was up 1% month-on-month in August, ahead of forecast for a 0.3% rise and following a 0.4% fall in July, boosted by a 6.0% gain in the mining and quarrying sector.

“The Bank of England is likely to take some comfort from August’s rebound in industrial production, but it will be concerned by the underlying weakness of manufacturing,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“The data are unlikely to hugely change market belief that the Bank of England will not be raising interest rates before late-2016, although we believe a move in the first half of the year is still very likely and would not rule out a move in February."

Mining stocks were also providing the market a boost, with Anglo American, Rio Tinto and BHP Billiton among the biggest risers on the FTSE 100, driven by an increase in gold and copper prices and an upgrade from Morgan Staley.

Morgan Stanley improved its stance on all three stocks, as it lifted its view on the European metals and mining sector to ‘attractive’ from ‘in line’.

Elsewhere, Germany’s industrial production rose 2.3% year-on-year in August, missing analysts’ expectations for a 3.3% gain. Compared to a month ago output in August fell 1.2%, trailing estimates for a 0.2% rise.

Meanwhile, the Bank of Japan opted against extending its stimulus measures, even though its inflation target is under threat amid slumping exports and a decline in oil prices.

On the company front, SABMiller was on the front foot on reports that AB InBev raised its bid to £42.15 per share, up from two initial offers of £40 and £38.

Tesco reversed an earlier decline after reporting a 55% drop in first half operating profit as discount retailers continue to take their toll, and warned the grocery market remained challenging.

International Consolidated Airlines and EasyJet dropped on rising oil prices and a downgrade by Credit Suisse. “We can see the close correlation between airlines and the oil price, with much of their recent outperformance resulting from the renewed weakness in the oil price,” said Credit Suisse, as it cut its stance on European airlines to ‘benchmark’ from ‘overweight’.

Brent crude rose 1.4% to $52.71 per barrel and West Texas Intermediate increased 1.7% to $49.37 per barrel, on signs of receding US production. Positive remarks by Shell chief executive Van Beurden also helped sentiment. Beurden suggested the first signs of recovery in the market are starting to appear and that prices should start to rise on the back of higher demand.

Marks & Spencer slumped after JPMorgan Cazenove downgraded the stock to ‘neutral’ from ‘overweight’ and cut its price target to 550p from 600p.

Market Movers

techMARK 3,037.86 -0.87%

FTSE 100 6,350.10 +0.38%

FTSE 250 17,071.03 -0.36%

FTSE 100 - Risers

Anglo American (AAL) 664.70p +10.01%

Rio Tinto (RIO) 2,485.50p +7.41%

Antofagasta (ANTO) 563.50p +4.93%

Aberdeen Asset Management (ADN) 343.20p +4.89%

BHP Billiton (BLT) 1,109.50p +4.72%

Glencore (GLEN) 122.40p +3.86%

Standard Chartered (STAN) 741.20p +3.79%

GKN (GKN) 288.10p +2.53%

Old Mutual (OML) 207.20p +2.42%

Fresnillo (FRES) 687.50p +2.23%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 559.50p -4.60%

easyJet (EZJ) 1,680.00p -4.55%

Hikma Pharmaceuticals (HIK) 2,158.00p -4.51%

Carnival (CCL) 3,297.00p -4.24%

TUI AG Reg Shs (DI) (TUI) 1,224.00p -3.47%

Marks & Spencer Group (MKS) 502.50p -3.27%

Berkeley Group Holdings (The) (BKG) 3,307.00p -2.96%

Sports Direct International (SPD) 753.50p -2.84%

Barratt Developments (BDEV) 636.50p -2.30%

Persimmon (PSN) 2,003.00p -2.25%

FTSE 250 - Risers

Vedanta Resources (VED) 511.00p +14.45%

Tullow Oil (TLW) 245.80p +10.17%

Premier Oil (PMO) 91.05p +9.30%

Evraz (EVR) 87.40p +6.98%

Kaz Minerals (KAZ) 115.50p +6.06%

Hunting (HTG) 466.00p +5.50%

Weir Group (WEIR) 1,389.00p +5.39%

Ophir Energy (OPHR) 104.40p +5.35%

Amec Foster Wheeler (AMFW) 842.50p +5.25%

Petrofac Ltd. (PFC) 876.00p +4.66%

FTSE 250 - Fallers

BTG (BTG) 566.00p -5.82%

Auto Trader Group (AUTO) 334.60p -3.85%

Man Group (EMG) 158.30p -3.48%

Wizz Air Holdings (WIZZ) 1,926.00p -3.36%

Betfair Group (BET) 3,158.00p -3.31%

Foxtons Group (FOXT) 232.40p -3.17%

Hays (HAS) 150.50p -3.15%

B&M European Value Retail S.A. (DI) (BME) 329.90p -2.97%

Bellway (BWY) 2,450.00p -2.89%

Spire Healthcare Group (SPI) 351.20p -2.74%

FTSE TechMARK - Risers

Oxford Biomedica (OXB) 8.24p +5.64%

Oxford Instruments (OXIG) 631.50p +2.68%

Skyepharma (SKP) 340.75p +0.44%

Spirent Communications (SPT) 75.50p +0.33%

Consort Medical (CSRT) 929.50p +0.22%

Sepura (SEPU) 174.00p +0.14%

SDL (SDL) 367.50p +0.07%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 203.03 +0.02%

FTSE TechMARK - Fallers

DRS Data & Research Services (DRS) 12.00p -5.88%

Filtronic (FTC) 6.75p -1.82%

BATM Advanced Communications Ltd. (BVC) 19.50p -1.27%

Dialight (DIA) 658.00p -0.90%

XP Power Ltd. (DI) (XPP) 1,660.00p -0.60%

KCOM Group (KCOM) 91.50p -0.54%

E2V Technologies (E2V) 238.25p -0.52%