London close: Stocks kick the week off with gains after G-20 breakthrough

London stocks finished higher on Monday, with miners and energy issues leading the advance as news of a 90-day trade truce between the US and China boosted risk appetite.

The FTSE 100 was up 1.18% or 82.17 points at 7,062.88, while the pound gave up its earlier gains against the dollar, trading down 0.1% at 1.27318, most likely due to ongoing jitters about Brexit. Against the euro, sterling was down 0.43% at 1.1219.

At the G20 summit over the weekend, US President Trump and China's Xi Jinping said they would put off the introduction of any further tariffs for the time being as they attempt to settle their differences through talks.

Washington pledged to hold fire on raising tariffs on $200bn worth of Chinese goods from 10% to 25%, as had been planned for 1 January. Meanwhile, China said it was willing to buy a "very substantial" amount of agriculture, energy and other goods from the US to reduce the trade imbalance.

The working dinner between Trump and Xi generated "as good a result as we could have realistically hoped for", said analyst Craig Erlam of Oanda.

"Three months is not a very long time to achieve this so there are naturally plenty of sceptics out there but this is a rare piece of good news in a conflict that has yet to produce any," he added.

"Even if three months is not long enough to agree on terms that avert more tariffs and removes those already imposed, it could be long enough to agree a broad outline of what the future relationship will look like and then extend the truce. The important thing is that, while we may be sat here in three months discussing the increase in tariffs after talks failed to produce a solution, there is now a chance that we aren’t and investors are understandably lifted by that prospect."

Back on home turf, the Prime Minister was being threatened by what some Westminster watchers were calling a "constitutional crisis" as Labour teamed up with the DUP to demand the government publishes the full legal advice on Theresa May's Brexit deal. Opposition parties are threatening to launch contempt of parliament proceedings against Downing Street over the issue, with MPs voting last month to ensure the government would be required to lay before parliament "any legal advice in full".

There was also data released showing that the manufacturing sector saw a slight rebound in activity in November, but optimism for the future sank to fresh lows as Brexit uncertainties weighed heavily.

The IHS Markit CIPS purchasing managers’ index for November was 53.1, an improvement on October’s 27-month low of 51.1. The domestic market was the main source of new contract wins, with output and new orders rising across the consumer, intermediate and investment goods sectors.

The level of new export business dropped for the second consecutive month, however. That was the first back-to-back contraction since early 2016, with respondents blaming reduced interest from overseas clients and the ongoing Brexit uncertainties.

The overall degree of optimism dipped to a 27-month low, as concerns about Brexit, sterling and a potential slowdown in the wider economy dominated.

The PMI data echoed the fourth quarter EEF/BDO Manufacturing Outlook Survey, also published on Monday, which found that the outlook for manufacturers was deteriorating. It said that while the balance for output, at +22%, and orders, at +14%, remained positive, "there has been a clear moderation in the strength of balances throughout the course of 2018, a trend which has accelerated in the final quarter".

Miners were the standout gainers, with Antofagasta, Anglo, Glencore, BHP and Rio Tinto all trading higher, which along with energy-related stocks such as BP, Shell, Premier Oil and Tullow, were firmer as oil prices surged on the back of improving Sino-US relations. West Texas Intermediate was up 3.5% to $52.77 a barrel and Brent crude was 3.0% higher at $61.29, boosted by uncertainty as Qatar pulled out of the OPEC producers' cartel.

In corporate news, Spirax-Sarco Engineering rallied as it said it had sold its German HygroMatik unit to Carel Industries for €59m (£52m).

Unilever edged up as it agreed to buy Horlicks and other nutrition brands listed in India and Bangladesh from GlaxoSmithKline for roughly £3.1bn.

GSK's shares were down as it announced that it would spend all that cash and more to buy specialist oncology pharma company Tesaro for $5.1bn (£4bn).

Engineer Babcock nudged up as it said that its joint venture with UGL, Naval Ship Management, has been awarded a new contract by the Australian Defence Force, worth around AUD $1.5bn (£860m) for up to 15 years.

Syncona pushed higher after saying that its portfolio company, Autolus Therapeutics has dosed the first patient in a trial of a new therapy for treating lymphoma.

Dunelm was boosted by an upgrade to 'buy' from 'hold' at Peel Hunt, but Thomas Cook tanked, with traders pointing to a Berenberg note out late last week in which it cut the stock to 'sell' from 'hold' and slashed the price target to 12p from 65p.

"While its performance has undoubtedly been affected by the weather, we fear that this is merely papering over the cracks of a structurally challenged business model," analysts said. "With TCG’s bond yields now over 10%, operational performance weak and cash generation anaemic, the risk that the company will need fresh equity is, in our view, back on the agenda."

RPC Group was in the red as the plastic packaging supplier said it was continuing buyout talks with just one US private equity giant, after one potential suitor walked away. RPC said it has ended discussions with Bain Capital but that the deadline for Apollo Global Management to make an offer has been pushed back to 21 December as talks continue.

Southend airport owner Stobart Group was under pressure as it said it was cutting its fourth-quarter dividend to focus on future investments.

Fashion brand Ted Baker was sharply lower after saying it will launch an investigation following a petition from its staff over a culture of "forced hugging" at the company, with founder and chief executive officer Ray Kelvin under fire for his behaviour.

Market Movers

FTSE 100 (UKX) 7,062.41 1.18%
FTSE 250 (MCX) 18,563.85 0.45%
techMARK (TASX) 3,483.60 -0.36%

FTSE 100 - Risers

Antofagasta (ANTO) 863.20p 7.85%
Evraz (EVR) 488.80p 7.64%
Anglo American (AAL) 1,675.40p 6.97%
Wood Group (John) (WG.) 674.40p 6.20%
BHP Group (BHP) 1,590.00p 5.89%
GVC Holdings (GVC) 781.00p 5.14%
Hargreaves Lansdown (HL.) 1,991.00p 4.71%
Burberry Group (BRBY) 1,857.50p 4.59%
Smurfit Kappa Group (SKG) 2,220.00p 4.42%
Rio Tinto (RIO) 3,701.50p 4.00%

FTSE 100 - Fallers

GlaxoSmithKline (GSK) 1,498.00p -7.62%
Kingfisher (KGF) 243.00p -2.80%
BT Group (BT.A) 256.60p -2.06%
Royal Mail (RMG) 315.40p -1.38%
British Land Company (BLND) 557.20p -1.31%
United Utilities Group (UU.) 751.40p -1.18%
SSE (SSE) 1,083.00p -1.14%
ITV (ITV) 143.60p -1.10%
Associated British Foods (ABF) 2,399.00p -1.03%
Standard Life Aberdeen (SLA) 262.95p -0.92%

FTSE 250 - Risers

Dunelm Group (DNLM) 618.50p 14.11%
Ferrexpo (FXPO) 188.90p 7.76%
Kaz Minerals (KAZ) 590.00p 7.04%
Capita (CPI) 109.75p 6.24%
Tullow Oil (TLW) 194.30p 5.37%
Games Workshop Group (GAW) 3,190.00p 5.11%
Premier Oil (PMO) 74.34p 4.88%
Weir Group (WEIR) 1,539.00p 4.41%
Spectris (SXS) 2,495.00p 4.22%
Hunting (HTG) 586.50p 4.15%

FTSE 250 - Fallers

Thomas Cook Group (TCG) 23.64p -21.46%
Ted Baker (TED) 1,557.00p -15.12%
Kier Group (KIE) 446.40p -12.20%
Stobart Group Ltd. (STOB) 174.40p -11.74%
RPC Group (RPC) 669.60p -6.58%
Spire Healthcare Group (SPI) 116.10p -6.52%
Civitas Social Housing (CSH) 100.00p -4.76%
Go-Ahead Group (GOG) 1,642.00p -4.76%
Fisher (James) & Sons (FSJ) 1,656.00p -4.50%
Keller Group (KLR) 563.00p -3.92%