London midday: UK stocks up after PBoC raises reference rate, Greece approves bailout

UK stocks edged higher as China’s central bank increased the reference rate and Greece approved a draft bailout package.

The People’s Bank of China raised the value of the yuan against the dollar by 0.05% after three days of devaluations.

The move came as the Bank tried to soothe the market by promising to work towards a stable currency following a surprise devaluation of almost 2% on Tuesday.

Meanwhile, the Greek parliament has approved a draft third bailout of about €85bn (£61bn) after a marathon all-night session, with the government aided by votes from opposition parties and likely to call a confidence vote due to internal divisions.

Greek Prime Minister Alexis Tsipras had urged his fellow members of parliament to vote 'yes' and survived despite up to 42 rebel votes or abstentions from his Syriza party's MPs, including a 'no' vote from former finance minister Yannis Varoufakis.

The proposed deal involves tax rises and spending cuts, with negotiators having on Tuesday agreed a budget with a primary deficit of 0.25% of gross domestic product (GDP) in 2015, improving to a 0.5% surplus in 2016, 1.75% in 2017 and a 3.15% surplus in 2018.

Elsewhere in Europe, a report on Eurozone gross domestic product showed the economy rose less than forecast in the second quarter. The EU statistics office said GDP climbed 0.3% quarter-on-quarter and 1.2% year-on-year, short of expectations for a 0.4% and 1.3% rise respectively.

Separately, Eurozone inflation fell 0.6% on the month in July but rose 0.2% year-on-year, as expected, Eurostat confirmed in its final estimate. Inflation remains well below the European Central Bank’s target of just below 2%.

Closer to home, UK construction output rose 2.6% year-on-year in June, missing analysts’ estimates for a 3.3% gain.

Later on, the University of Michigan releases its consumer confidence index at 1400BST and US industrial production data is due at 1315 BST.

On the corporate front, Glencore declined after the miner confirmed it has completed the sale of the Tampakan copper project in the Philippines as it sells off assets amid a challenging market.

Vodafone snapped an earlier rise after the company and fellow mobile network Three bought a sizeable piece of UK mobile phone spectrum in an auction of L-band frequency by US-based Qualcomm.

BP slumped on news it could face a $48m fine after a US regulatory judge ruled that the oil giant’s energy traders rigged the natural gas markets in Texas following hurricane Ike in 2008.

TUI gained after JP Morgan and Jefferies lifted their target price on the stock.

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