London midday: Stocks rebound amid volatility ahead of EU referendum

UK equities rebounded on Friday from the previous day’s declines ahead of next week’s European Union referendum.

“There hasn’t really been much to spark this morning’s climb; today’s rebound is likely just another instance of volatility in the run up to the referendum, rather than any real chink of light in the Brexit-fearing clouds that have begun to hang over the market,” said Connor Campbell, financial analyst at Spreadex.

Morgan Stanley said the probability of a vote to Remain in next Thursday's EU referendum stands at 55%, based on the expectation of a late swing in the polls. In this event, which is the bank’s base case, it expects to see a stock rally that could push the FTSE 100 up 14% from its current level.

Worries about Brexit had sent banking stocks into the red on Thursday. However, Lloyds Banking Group, Barclays, Royal Bank of Scotland and Standard Chartered were the topping risers on the FTSE 100 on Friday.

Housebuilders Taylor Wimpey, Barratt Developments and Berkeley Group also rallied.

Investors’ spirits were also lifted by news that Greece’s eurozone creditors have agreed to release a much-needed €7.5bn tranche of funding. European Commissioner Pierre Moscovici said the agreement was a “a welcome breath of oxygen for the Greek economy”.

On the economic data front, there is little on the calendar with US housing starts, US building permits and the US Baker Hughes Rig Count the only notable releases due in afternoon trade.

European Central Bank president Mario Draghi is due to speak at 1600 BST in Munich. The market will be looking out for any remarks on ECB policy and the looming European Union referendum in Britain on 23 June.

Fellow ECB board member Benoit Couere speaks in Berlin at 1245 BST.

Meanwhile, oil prices reversed the prior day's declines with Brent crude up 2.1% to $48.24 per barrel and West Texas Intermediate up 1.6% to $46.97 per barrel.

On the corporate front, HSBC shares climbed even as it said it will pay $1.57bn to end a class action lawsuit over its 2003 purchase of Household International that could have exposed it to $3.6bn in payouts. The bank said it would take a pre-tax charge of around $585m in the second quarter.

Tesco gained as it confirmed the sale of its Dobbies Garden Centres chain to an investor group led by Midlothian Capital Partners and Hattington Capital.

BP was a high riser after agreeing with Rosneft to create a new joint venture, Yermak Neftegaz, to conduct exploration in the West Siberian and Yenisey-Khatanga basins in the Russian Federation.

Aerospace and defence firm Cobham rallied after saying its one-for-two rights issue had been 97.21% subscribed. The 89p-a-share issue announced earlier this month will raise £506.7m to reduce debt.

Randgold and Fresnillo slid as gold prices fell on the Comex.

Electricity and gas supplier National Grid was in the red after MPs said the government should split the company up to create an American-style independent operator system.

Market Movers

FTSE 100 (UKX) 6,025.98 1.27%
FTSE 250 (MCX) 16,294.58 1.64%
techMARK (TASX) 2,977.99 1.08%

FTSE 100 - Risers

Lloyds Banking Group (LLOY) 64.55p 5.20%
Standard Chartered (STAN) 521.50p 4.56%
Taylor Wimpey (TW.) 175.90p 4.39%
Barclays (BARC) 165.25p 4.26%
TUI AG Reg Shs (DI) (TUI) 1,000.00p 4.11%
Anglo American (AAL) 636.20p 3.89%
Barratt Developments (BDEV) 530.50p 3.82%
Royal Bank of Scotland Group (RBS) 222.00p 3.64%
Berkeley Group Holdings (The) (BKG) 3,050.00p 3.39%
Old Mutual (OML) 175.60p 3.35%

FTSE 100 - Fallers

Randgold Resources Ltd. (RRS) 6,750.00p -2.53%
Fresnillo (FRES) 1,218.00p -1.22%
National Grid (NG.) 953.40p -0.88%
Unilever (ULVR) 3,082.00p -0.77%
Diageo (DGE) 1,776.00p -0.42%
British American Tobacco (BATS) 4,136.50p -0.22%
Sage Group (SGE) 593.50p -0.08%
Rexam (REX) 630.00p -0.00%
Reckitt Benckiser Group (RB.) 6,650.00p 0.03%
SABMiller (SAB) 4,275.50p 0.05%

FTSE 250 - Risers

Shawbrook Group (SHAW) 241.30p 9.19%
Virgin Money Holdings (UK) (VM.) 323.40p 6.38%
Restaurant Group (RTN) 332.60p 6.02%
International Personal Finance (IPF) 265.00p 5.87%
Clarkson (CKN) 2,162.00p 5.62%
Morgan Advanced Materials (MGAM) 241.20p 5.33%
Atkins (WS) (ATK) 1,333.00p 5.21%
Bellway (BWY) 2,537.00p 5.10%
Ted Baker (TED) 2,667.00p 5.08%
Amec Foster Wheeler (AMFW) 427.80p 5.03%

FTSE 250 - Fallers

Allied Minds (ALM) 332.50p -3.90%
Centamin (DI) (CEY) 111.40p -3.63%
Brown (N.) Group (BWNG) 219.70p -2.70%
Hastings Group Holdings (HSTG) 176.00p -1.95%
Softcat (SCT) 337.80p -1.57%
Acacia Mining (ACA) 339.90p -1.56%
Aveva Group (AVV) 1,595.00p -1.54%
Interserve (IRV) 288.70p -0.86%
Croda International (CRDA) 2,821.00p -0.84%
The Renewables Infrastructure Group Limited (TRIG) 96.60p -0.62%