London open: Stocks rally as deal news lifts sentiment; Meggitt surges

London stocks rallied in early trade on Monday, having been hit last week amid concerns about China’s tech crackdown, with deal news helping to boost sentiment.

At 0845 BST, the FTSE 100 was 1% firmer at 7,100.13.

CMC Markets analyst Michael Hewson said: "Last week Asia markets saw big declines due to a regulatory crackdown in China, with the Nikkei more or less trading near to its lows this year and the Hang Seng trading at a nine-month low.

"The extent of the falls appeared to prompt a partial backtrack, or softening of tone by the Chinese authorities prompting a little bit of a rebound which appears to have continued today in Asia."

In equity markets, shares in defence and aerospace engineer Meggitt rocketed as it agreed to be bought by US rival Parker-Hannafin for £6.3bn. Under the terms of the deal, Meggitt shareholders will receive 800p per share, which is a premium of around 70.5% to the closing share price on Friday.

GKN owner Melrose and engine maker Rolls-Royce also gained.

HSBC rose after the bank said it would reinstate dividends as first-half profits more than doubled as an ongoing restructuring and pivot to Asia continues to pay off. Reported profit before tax rose $6.5bn to $10.8bn. The bank said it will pay an interim dividend of 7 cents a share after UK regulators last year ordered banks to suspend payouts amid the coronavirus pandemic.

SSE was trading up after agreeing to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) for £1.23bn in cash.

Fund administrator Sanne rose sharply after saying it was in advanced talks with Apex Group about a possible takeover at 920p per share in cash.

Elsewhere, Volution advanced after saying it had bought Energy Recovery Industries, a maker and supplier of low-carbon, energy efficient heat exchanger cells, for an initial €23.4m.

Market Movers

FTSE 100 (UKX) 7,100.13 0.96%
FTSE 250 (MCX) 23,277.70 1.43%
techMARK (TASX) 4,607.33 2.90%

FTSE 100 - Risers

Melrose Industries (MRO) 169.45p 5.84%
Rolls-Royce Holdings (RR.) 104.08p 4.38%
International Consolidated Airlines Group SA (CDI) (IAG) 174.64p 3.89%
Next (NXT) 8,106.00p 2.84%
NATWEST GROUP PLC ORD 100P (NWG) 207.90p 2.72%
JD Sports Fashion (JD.) 920.00p 2.56%
Barclays (BARC) 178.76p 2.44%
Anglo American (AAL) 3,267.00p 2.40%
Rightmove (RMV) 719.00p 2.39%
Whitbread (WTB) 3,117.00p 2.33%

FTSE 100 - Fallers

Fresnillo (FRES) 812.20p -0.73%
AstraZeneca (AZN) 8,221.00p -0.57%
Pearson (PSON) 865.60p -0.44%
Hikma Pharmaceuticals (HIK) 2,638.00p -0.30%
Smith & Nephew (SN.) 1,458.50p -0.24%
Polymetal International (POLY) 1,559.50p -0.22%
GlaxoSmithKline (GSK) 1,416.00p -0.13%
Avast (AVST) 579.60p -0.07%
National Grid (NG.) 923.60p -0.05%
Unilever (ULVR) 4,149.50p -0.04%

FTSE 250 - Risers

Meggitt (MGGT) 746.20p 59.07%
Sanne Group (SNN) 915.00p 8.41%
Volution Group (FAN) 491.50p 4.02%
Tullow Oil (TLW) 46.63p 3.99%
Capita (CPI) 36.53p 3.57%
Cineworld Group (CINE) 65.78p 3.49%
QinetiQ Group (QQ.) 340.40p 3.40%
Network International Holdings (NETW) 351.70p 3.20%
Hochschild Mining (HOC) 159.10p 3.18%
Aston Martin Lagonda Global Holdings (AML) 2,012.00p 3.07%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 331.60p -2.21%
Convatec Group (CTEC) 232.20p -1.98%
Centamin (DI) (CEY) 105.70p -1.26%
Airtel Africa (AAF) 88.30p -1.06%
Spire Healthcare Group (SPI) 220.00p -0.90%
Premier Foods (PFD) 110.60p -0.72%
Safestore Holdings (SAFE) 1,049.00p -0.66%
GCP Infrastructure Investments Ltd (GCP) 106.00p -0.56%
XP Power Ltd. (DI) (XPP) 5,120.00p -0.39%
ICG Enterprise Trust (ICGT) 1,082.00p -0.18%