London open: Stocks gain ahead of Yellen's testimony

UK stocks rose on Wednesday as investors brushed off concerns about the health of the world's economy and the state of the banking system.

Japan's Nikkei was down 2.32% as the yen touched 15-month highs, making the country's exports less competitive. Stocks have fallen to a 15-month low since the Bank of Japan’s announcement last month to push interest rates below zero.

European banks were also under pressure as worries over the strength of sector sparked fears about the prospect of a another global recession. Concerns were raised after the chief executive of Deutsche Bank was forced to reassure staff that the bank was “rock solid” and that it had "sufficient" reserves to make due payments this year on AT1 securities.

'While it is easy to suggest that the current sell-off is an over-reaction where banks are concerned, confidence is everything, and as we know from 2008 once it is gone it is very difficult to get back," said Michael Hewson, chief market analyst at CMC Markets.

"With economic growth showing signs of slowing, and interest rates already at record lows and in some case negative, the capacity for banks to build up resilience and improve their profitability is becoming that much more difficult, as central bankers around the world fumble around in the dark."

Meanwhile, all eyes will be on Federal Reserve chair Janet Yellen's testimony to US Congress at 1500 GMT. Markets will be looking for clues on when the Fed will next raise interest rates in light of the slowdown in economic growth.

In the UK, reports on industrial and manufacturing production will be in focus at 0930 GMT while the NIESR releases its latest GDP estimate at 1500 GMT.

On a positive note oil prices were sitting higher with Brent crude up 3.1% to $31.29 per barrel and West Texas Intermediate up 2.6% to $28.68 per barrel at 0921 GMT.

On the company front, Hikma Pharmaceuticals plunged as the cash consideration for its takeover of Roxane Laboratories almost halved on the back of significantly lower revenue projections.

ARM Holdings declined despite posting a strong set of full year results and saying it was confident of meeting forecasts for 2016 as demand for its microchip technology continues to grow.

Market Movers

FTSE 100 (UKX) 5,683.62 0.91%
FTSE 250 (MCX) 15,523.59 1.35%
techMARK (TASX) 2,937.07 0.50%

FTSE 100 - Risers

Prudential (PRU) 1,173.50p 4.22%
Tesco (TSCO) 180.85p 4.06%
Mondi (MNDI) 1,186.00p 3.76%
Old Mutual (OML) 159.70p 3.70%
St James's Place (STJ) 839.50p 3.45%
Hargreaves Lansdown (HL.) 1,165.00p 3.28%
3i Group (III) 404.10p 3.09%
Schroders (SDR) 2,437.00p 3.00%
Provident Financial (PFG) 2,876.00p 2.97%
Aberdeen Asset Management (ADN) 232.10p 2.93%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,727.00p -13.43%
ARM Holdings (ARM) 897.00p -4.57%
TUI AG Reg Shs (DI) (TUI) 1,049.00p -3.14%
Fresnillo (FRES) 836.00p -1.99%
Randgold Resources Ltd. (RRS) 5,790.00p -1.95%
National Grid (NG.) 940.20p -0.37%
GlaxoSmithKline (GSK) 1,357.50p -0.22%
Glencore (GLEN) 94.27p -0.18%
Burberry Group (BRBY) 1,170.00p -0.17%
Centrica (CNA) 187.60p -0.16%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 925.00p 8.00%
Dunelm Group (DNLM) 889.50p 7.82%
Virgin Money Holdings (UK) (VM.) 290.00p 5.99%
Marshalls (MSLH) 280.00p 5.82%
Zoopla Property Group (WI) (ZPLA) 211.10p 5.55%
Henderson Group (HGG) 246.80p 4.49%
Redrow (RDW) 422.00p 4.46%
Thomas Cook Group (TCG) 95.20p 4.10%
Investec (INVP) 426.80p 3.92%
Pendragon (PDG) 34.50p 3.88%

FTSE 250 - Fallers

Nostrum Oil & Gas (NOG) 268.10p -2.54%
Sophos Group (SOPH) 173.20p -1.70%
Tullow Oil (TLW) 158.80p -1.67%
TalkTalk Telecom Group (TALK) 198.70p -1.34%
Polypipe Group (PLP) 287.00p -1.03%
Worldwide Healthcare Trust (WWH) 1,591.00p -0.93%
Jimmy Choo (CHOO) 131.30p -0.91%
HarbourVest Global Private Equity Limited A Shs (HVPE) 891.00p -0.89%
BH Macro Ltd. GBP Shares (BHMG) 1,995.00p -0.84%
Scottish Inv Trust (SCIN) 549.50p -0.81%