London open: Stocks jump on 'dovish' ECB remarks

London's top-flight index jumped early on Tuesday on the back of dovish comments from the European Central Bank's chief economist and following strong gains in Wall Street the previous session which saw the S&P 500 bounce back from the prior week's losses.

Nevertheless, the weekend's tragic events in France and their potential implications were still very much front and centre on investors' minds.

As of 08:39 the FTSE 100 was 93.38 points higher versus Monday's close, trading at 6,239.76. Overnight, the Shanghai Stock Exchange's Composite Index finished 0.06% lower to 3,604.795.

On Tuesday morning, French Prime Minister Manuel Valls echoed remarks by his President that the emphasis will now be on meeting the country's new security challenges and not on meeting Brussels's fiscal rules.

Other recent attacks, including those on Beirut and the downing of a Russian airliner over Egypt, show that 'geopolitical risk' is a growing downside risk to global growth," economists at Barclays said, meaning any comparison with previous terrorist attacks such as in Madrid in 2004 and in London in 2005 "is not necessarily relevant".

"Longer-term effects are more uncertain, especially given the high uncertainty regarding the reaction of the international community and its ability to strengthen cooperation in the fight against terrorism, as well as political reactions and actions in the different member states," Barclays economist Philippe Gudin wrote.

The single currency was moving lower after the ECB's chief economist, Peter Praet, told Bloomberg the central bank had to be careful that inflation expectations did not fall too low, thus coming unhinged. This was taken as a hint at the possibility of further monetary stimulus.

As of 08:54 the euro was 0.36% weaker at 1.0647 versus the US dollar.

Consumer price data in the UK and US for the month of October were due out later in the day, with the former expected to show a small move higher and the latter the opposite.

Barclays's forecast was calling for British consumer prices to fall to a 0.2% year-on-year pace from 0.1% in the month before.

While a further fall in CPI will spark hyperbolic headlines about a descent into pernicious deflation, Pantheon Macroeconomic's Sam Tombs said these should be ignored. "October’s print will almost certainly represent the nadir and we think it will take only a year for CPI inflation to return to the MPC’s 2% target."

US stocks registered sharp gains on the first day of the week, partly thanks to dovish comments out of US Boston Fed president Eric Rosengren in remarks to the FT and positive data on Chinese capital outflows.

The latest reading on the German ZEW institute's for the month of November is also eagerly awaited.

FTSE 100: Smiths Group paces early gains

Sales at Smiths Group declined 4% in the first quarter, as weakness in its oil and gas market was not quite made up by solid trading in detection and medical. The company's new chief executive Andy Reynolds Smith said expectations for the full year remained "broadly unchanged" and that he saw "clear potential" for operational improvements across the business.

EasyJet posted an 18% rise in full year pre-tax profit as revenue and passenger numbers grew, as it expressed confidence over the long-term outlook for the business. For the twelve months to the end of September, pre-tax profit came in at £686m from £581m, on revenue of £4.69bn, up 3.5% from last year.

British Land said its its net asset value was 7.5% ahead at 891p at the half-year stage with underlying pre-tax profits up 10.3% at £171m driven by successful leasing activity and lower financing costs. “Looking forward, we remain positive about occupational demand in our markets which is supported by UK economic performance. We are, of course, mindful of increased volatility in a number of capital markets which could adversely impact our investment markets,” said chief executive Chris Grigg.

Discounters Aldi and Lidl have reached a combined share of 10% of the British grocery market for the first time, while Sainsbury's became the first major supermarket to claim a market share increase for over a year, according to Kantar.

FTSE 250: US outfit swoops in on London-listed rival

Liberty Global reached an agreement on Monday to purchase Cable&Wireless Communications in a cash and stock deal valuing the carrier at £3.5bn ($5.3bn). The transaction – which valued the London-listed carrier at 10.7 operating earnings – was set to extend the reach of his enterprise further into Latin America.

Despite challenging market conditions and a dip in revenue over the last four months, Bodycote said it is on track to meet full-year profit expectations, sending the share price surging. The company said that group revenue for the four months was down 7.5% at constant exchange rates compared to the same period in 2014. However, foreign exchange meant that revenues were actually down 9.7% for the period.

Residential developer Crest Nicholson said its growth strategy remains on track, after it reported an increase in housing volumes this year. In a trading update released on Tuesday, the FTSE 250 group said it delivered 2,725 units in the year to the end of October, an 8% year-on-year increase.

Safety, health and environmental technology group Halma said first half pre-tax profits rose 5% £64.2m, while revenues were up 11% to £380m. Organic revenue growth at constant currency improved 7%, while adjusted profit before tax was advanced to £74.7m from £69 a year earlier.

Market Movers

FTSE 100 (UKX) 6,249.61 1.68%
FTSE 250 (MCX) 17,058.08 1.27%
techMARK (TASX) 3,128.78 1.51%

FTSE 100 - Risers

Smiths Group (SMIN) 1,020.00p 10.21%
Tesco (TSCO) 172.65p 3.88%
Rolls-Royce Holdings (RR.) 548.00p 3.79%
Glencore (GLEN) 92.79p 3.63%
Old Mutual (OML) 198.50p 3.60%
Sainsbury (J) (SBRY) 251.10p 3.25%
GKN (GKN) 291.80p 2.96%
Royal Dutch Shell 'A' (RDSA) 1,621.50p 2.89%
Royal Dutch Shell 'B' (RDSB) 1,633.50p 2.87%
Aberdeen Asset Management (ADN) 329.90p 2.74%

FTSE 100 - Fallers

easyJet (EZJ) 1,742.00p -2.30%
Randgold Resources Ltd. (RRS) 3,994.00p -0.84%
Imperial Tobacco Group (IMT) 3,572.00p -0.47%
SABMiller (SAB) 4,019.00p 0.06%
Fresnillo (FRES) 677.50p 0.52%
InterContinental Hotels Group (IHG) 2,475.00p 0.57%
Merlin Entertainments (MERL) 396.10p 0.66%
National Grid (NG.) 918.40p 0.69%
Experian (EXPN) 1,194.00p 0.76%
Inmarsat (ISAT) 1,048.00p 0.77%

FTSE 250 - Risers

Bodycote (BOY) 561.50p 12.73%
Kaz Minerals (KAZ) 83.40p 9.31%
Enterprise Inns (ETI) 102.60p 8.00%
Cable & Wireless Communications (CWC) 79.55p 7.86%
Halma (HLMA) 809.00p 7.01%
Ophir Energy (OPHR) 94.90p 6.33%
Atkins (WS) (ATK) 1,445.00p 6.09%
Entertainment One Limited (ETO) 234.70p 4.03%
Aggreko (AGK) 957.00p 3.85%
Spirax-Sarco Engineering (SPX) 3,014.00p 3.65%

FTSE 250 - Fallers

B&M European Value Retail S.A. (DI) (BME) 305.00p -4.57%
Nostrum Oil & Gas (NOG) 333.40p -3.11%
TalkTalk Telecom Group (TALK) 237.00p -2.07%
Jimmy Choo (CHOO) 150.00p -1.96%
CLS Holdings (CLI) 1,800.00p -1.59%
Big Yellow Group (BYG) 737.50p -1.34%
Just Retirement Group (JRG) 158.40p -1.00%
Lookers (LOOK) 173.60p -0.86%
Diploma (DPLM) 710.00p -0.84%
Spire Healthcare Group (SPI) 310.90p -0.67%