London open: Stocks rise on trade optimism but airlines hit by Ryanair warning

London stocks overcame sterling's two-month high in early trade on Friday as investors welcomed suggestions that trade relations between the US and China were improving, with all eyes on UK retail sales data.

At 0830 GMT, the FTSE 100 was up 0.7% at 6,883.14, while the pound was down 0.3% against the dollar and the euro at 1.2950 and 1.1366, respectively.

After the Daily Telegraph revealed that MPs had been handed a printout detailing the logistics of a second Brexit referendum would take 14 months to organise, Spreadex analyst Connor Campbell said, "its mere existence was enough to get sterling dreaming of a Brexit reversal".

He added: "The currency will be on high alert for any more Brexit titbits as the day goes on, especially any details on what Plan B Theresa May will produce on Monday. It also has December’s retail sales reading to deal with, though it has been well prepped from the expected drop from 1.4% to -0.8% month-on-month by the UK’s troublesome set of post-Xmas updates from the sector."

Brexit aside, sentiment was underpinned by reports that the US might consider easing some trade tariffs against China.

"These reports suggested that Treasury Secretary Steve Mnuchin was pushing the idea, though chief trade negotiator Robert Lighthizer was lukewarm at best on it," said CMC Markets analyst Michael Hewson.

"While there hasn’t been any solid confirmation that this might happen one way or the other, the mere prospect of further progress was enough to propel US markets to new one-month highs."

In corporate news, Rio Tinto edged up after saying it shipped 2% more iron ore last year, while copper production increased by a third after a solid final quarter of the year. The group said the negative impact to profits from raw material input price inflation, particularly in the aluminium business, had continued in the second half of 2018.

Health and environmental technology group Halma ticked higher after announced the acquisition of Rath Communications, a provider of emergency communication systems for areas of refuge in the US, for $42.4m (£32.6m), on a cash and debt free basis.

Airlines were under the cosh after a profit warning from Ryanair, with EasyJet, British Airways owner International Consolidated Airlines Group and Wizz Air all under pressure.

Ryanair was weaker as the budget airline cut its full-year profit guidance to between €1bn and from between €1.1bn and €1.2bn, pinning the blame on lower air fares and saying that it couldn't rule out further cuts to air fares and/or slightly lower full-year guidance.

Neil Wilson, chief market analyst at Markets.com, said: "The fundamental problem of overcapacity in the European short haul sector remains and will yet take time to ease. Norwegian's closing of bases across southern Europe is a positive but there is yet more consolidation required.

"Indeed, even as demand pressures relent it is true that the sector as a whole is very adept at competing away any margin growth through lower fares. On top of this we can add a good dose of Brexit uncertainty into mix to suggest that this is a very uncertain period for airlines, albeit the largest carriers such as Ryanair, EasyJet and IAG are set to win out from sector-wide consolidation."

Elsewhere, cloud-enabled security software provider Sophos tumbled 20% after a nine-month trading update in which it said it expects to see a modest decline in full-year constant current billings.

On the broker note front, Antofagasta was downgraded to 'sell' at Goldman Sachs, while EasyJet was cut to 'neutral' at JPMorgan. Coats was initiated at 'equalweight' at Barclays and RWS Holdings was started at 'overweight'.

Market Movers

FTSE 100 (UKX) 6,883.14 0.71%
FTSE 250 (MCX) 18,573.93 0.20%
techMARK (TASX) 3,350.65 0.08%

FTSE 100 - Risers

Melrose Industries (MRO) 165.75p 2.09%
Wood Group (John) (WG.) 552.52p 2.09%
St James's Place (STJ) 978.00p 1.83%
Glencore (GLEN) 295.37p 1.77%
Anglo American (AAL) 1,821.20p 1.74%
Prudential (PRU) 1,474.00p 1.73%
3i Group (III) 829.20p 1.49%
Ashtead Group (AHT) 1,895.50p 1.42%
TUI AG Reg Shs (DI) (TUI) 1,178.50p 1.33%
Standard Life Aberdeen (SLA) 265.80p 1.30%

FTSE 100 - Fallers

easyJet (EZJ) 1,128.00p -3.51%
International Consolidated Airlines Group SA (CDI) (IAG) 608.20p -1.23%
Vodafone Group (VOD) 147.12p -0.81%
Mondi (MNDI) 1,802.50p -0.19%
Coca-Cola HBC AG (CDI) (CCH) 2,521.00p -0.16%
Unilever (ULVR) 4,017.00p -0.12%
Rightmove (RMV) 466.75p 0.00%
DCC (DCC) 6,370.00p 0.00%
Morrison (Wm) Supermarkets (MRW) 221.65p 0.00%
Smiths Group (SMIN) 1,429.50p 0.00%

FTSE 250 - Risers

Premier Oil (PMO) 71.24p 1.92%
Convatec Group (CTEC) 141.05p 1.88%
Elementis (ELM) 188.50p 1.78%
CYBG (CYBG) 189.50p 1.72%
B&M European Value Retail S.A. (DI) (BME) 318.40p 1.60%
Tullow Oil (TLW) 204.20p 1.59%
Ferrexpo (FXPO) 205.90p 1.58%
Bovis Homes Group (BVS) 971.77p 1.54%
Sirius Minerals (SXX) 22.46p 1.54%
Playtech (PTEC) 411.50p 1.48%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 2,937.00p -3.29%
Rank Group (RNK) 146.80p -2.39%
Hill & Smith Holdings (HILS) 1,180.58p -2.19%
Sanne Group (SNN) 532.00p -2.03%
Ibstock (IBST) 235.77p -2.01%
Coats Group (COA) 82.85p -1.60%
Avast (AVST) 284.00p -1.59%
Mediclinic International (MDC) 327.00p -1.24%
Drax Group (DRX) 405.60p -1.07%
Dairy Crest Group (DCG) 443.96p -1.03%