London open: Stocks rebound as China scraps circuit-breaker rule

London stocks rebounded on Friday as oil prices reversed declines in the previous session and confidence grew on new measures in China.

Brent crude rose 1.6% to $34.33 per barrel while West Texas Intermediate increased 1.3% to $33.72 per barrel at 0851 GMT.

Chinese stocks closed higher as regulators suspended the so-called “circuit breaker rule” late on Thursday. The rule came into effect 30 minutes into trading in China after stocks plunged 7% on the CSI 300 index.

The new circuit breakers, which kicked in on Monday, have been criticised by analysts for exaggerating declines as investors rush to exit positions before getting locked in by the halts.

“Well after just four days the experiment appeared to fail with the China Securities Regulatory Commission deciding to suspend the mechanism…..in a bid to curb volatility. It's contributing to a better, although still volatile, start for markets in China this morning, but the uneasiness among investors remains high as each day brings about a new wave questions about government policy,” Deutsche Bank analysts said.

In another lift to markets, the People's Bank of China set the daily yuan rate at 6.5646 per dollar - firmer than the previous day's rate, ending eight days of weakening the currency.

In Europe, a report showed German industrial production fell 0.3% in November compared to a month ago, missing expectations for a 0.5% increase.

Germany’s trade balance surplus fell to €20.6bn in November from €22.3bn in October, although it was above the estimated €20.2bn. Exports rose 0.4% in November, compared to forecasts of 0.5% and the previous month’s 1.3% decline. Imports gained 1.6% in November following a 3.2% drop a month earlier, beating projections for a 1% increase.

UK trade balance figures are due at 0930 GMT with analysts expecting an decrease in November’s deficit.

Across the Pond, US jobs data will be in focus at 1330 GMT including the non-farm payrolls report, unemployment rate and earnings figures for December.

The US Federal Reserve last month decided to raise interest rates for the first time in nearly a decade, as the labour market and economy improved. The central bank looks set to increase rates further this year, provided the recovery continues.

Among corporate stocks, Royal Dutch Shell and BP continued to decline on concerns about the sector.

Hammerson slumped after signing a deal to sell the Villebon 2 retail park to a consortium of leading French institutional investors for €159m (£116m).

Home Retail continued to rally on reports that Sainsbury’s takeover bid is likely to rise to outbid other interested parties

Market Movers

FTSE 100 (UKX) 6,004.44 0.85%
FTSE 250 (MCX) 16,918.80 0.75%
techMARK (TASX) 3,177.90 0.80%

FTSE 100 - Risers

Tesco (TSCO) 146.55p 5.28%
GKN (GKN) 288.70p 5.06%
London Stock Exchange Group (LSE) 2,588.00p 3.03%
Glencore (GLEN) 81.04p 2.96%
BG Group (BG.) 961.90p 2.67%
Standard Life (SL.) 367.40p 2.48%
BAE Systems (BA.) 518.00p 2.47%
Sports Direct International (SPD) 524.50p 2.44%
Burberry Group (BRBY) 1,102.00p 2.23%
Standard Chartered (STAN) 516.60p 2.14%

FTSE 100 - Fallers

Intu Properties (INTU) 300.90p -1.34%
ARM Holdings (ARM) 955.50p -1.29%
Royal Dutch Shell 'A' (RDSA) 1,437.50p -1.17%
Royal Dutch Shell 'B' (RDSB) 1,445.50p -1.13%
BP (BP.) 335.00p -0.80%
Direct Line Insurance Group (DLG) 369.90p -0.43%
National Grid (NG.) 946.10p -0.39%
Hammerson (HMSO) 583.00p -0.26%
British Land Company (BLND) 754.00p -0.20%
Imperial Tobacco Group (IMT) 3,517.50p -0.11%

FTSE 250 - Risers

Vectura Group (VEC) 186.50p 4.72%
Elementis (ELM) 216.70p 4.53%
Ocado Group (OCDO) 304.10p 4.07%
Zoopla Property Group (WI) (ZPLA) 232.70p 3.42%
B&M European Value Retail S.A. (DI) (BME) 257.10p 3.29%
Marston's (MARS) 163.10p 2.71%
Home Retail Group (HOME) 139.60p 2.65%
Ted Baker (TED) 2,920.00p 2.46%
Entertainment One Limited (ETO) 166.70p 2.40%
Polymetal International (POLY) 576.00p 2.31%

FTSE 250 - Fallers

Cobham (COB) 271.70p -2.27%
Derwent London (DLN) 3,509.00p -1.87%
PayPoint (PAY) 897.00p -1.64%
Fidessa Group (FDSA) 1,877.00p -1.42%
Aggreko (AGK) 871.50p -1.30%
Sophos Group (SOPH) 242.70p -1.22%
Assura (AGR) 54.35p -1.18%
Jimmy Choo (CHOO) 124.90p -1.11%
Fidelity China Special Situations (FCSS) 130.70p -0.91%
JPMorgan American Inv Trust (JAM) 266.90p -0.78%