London close: Financials and miners pace gains amid US-China trade deal hopes

London stocks were firmly in the green on Monday, on the back of sizeable gains for select financials, alongside advances in miners' shares amid renewed hopes over a China-US trade deal, .

The FTSE 100 was up 0.95% at 7,396.29, with sentiment boosted after China said it will raise penalties on intellectual property violations.

Neil Wilson, chief market analyst at Markets.com, said: "We’ve had progress in an important area - China has appeared to relent to a degree on intellectual property, a key sticking point to the talks thus far.

"Beijing on Sunday said it will increase penalties for IP violations, and lower the bar for criminal proceedings to be brought in cases of alleged IP theft. This could be an important step forward, but we as ever will only believe it when we see it. The focus is on agreeing some kind of phase one deal before the Dec 15 deadline for about $150bn in tariffs to raise."

The mood was also lifted after China's state-run Global Times reported that the two nations were "very close" to a phase one trade deal.

Investors were also digesting a landslide victory over the weekend for pro-democracy parties in Hong Kong.

"The pro-democracy candidates controlled all but one of the 18 districts it seems. This is a humiliation to Beijing - there is no silent majority backing Carrie Lam and co - it will only embolden the protest movement further, which of course carries risks for investors," said Wilson.

On home turf, sterling rose as the latest election polls put the Conservative Party on course to win a majority in next month’s election. Polling analysis out over the weekend pointed to the Tories winning a 48-seat majority at the 12 December general election.

IG market analyst Josh Mahony said: "he pound has gained ground today, as markets gain confidence that we could see a Conservative majority in the critical Brexit-focused election. With the polls pointing towards continued improvements in Tory support, it seems likely we will see Johnson’s Brexit deal pushed through.

"However, while sterling bulls are hoping to see a Conservative majority, the Tory manifesto released over the weekend continues to highlight a drive towards ending the transition period by the end of 2020. With an all-encompassing deal near-impossible in that timeframe, the determination to meet this deadline could provide another potential no-deal cliff for markets to fear."

The pound was up 0.4% against the US dollar at 1.2880 and by 0.49% versus the euro to 1.1701.

Investors were also mulling the latest survey from the Confederation of British Industry, which showed that retail sales improved in the year to November following six months of declines. The survey found that 38% of respondents reported that sales volumes were higher than a year ago, with 41% saying they were down, giving a balance of -3%. This marked the highest level in seven months.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures were "mildly encouraging though the survey has stopped being a bellwether".

In equity markets, miners were among the standout gainers throughout most of the session amid China-US deal optimism, with Rio Tinto, Anglo American, Glencore, Antofagasta and BHP all higher, while Russian steelmaker Evraz racked up strong gains.

Burberry rallied after French luxury goods company LVMH, which owns brands such a Christian Dior and Givenchy, agreed to buy US jeweller Tiffany for $16.7bn.

On the downside, precious metals miner Fresnillo was the worst performer as gold prices retreated, with Centamin also in the red.

Restaurant Group was under the cosh after a trading update from its restaurant chain Wagamama, which said second-quarter UK like-for-like sales were up 6.3%. This was down from 12.9% UK growth reported in the first quarter, albeit against tougher comparatives.

In broker note action, Hochschild Mining was hit by a downgrade to ‘underperform’ at Bank of America Merrill Lynch and Softcat was weaker after a downgrade to ‘hold’ at Berenberg.

Hays was cut to ‘underperform’ at Credit Suisse, while AstraZeneca was lifted to ‘buy’ at Bryan Garnier and Direct Line was upgraded to ‘buy’ at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 7,396.29 0.95%
FTSE 250 (MCX) 20,703.17 1.06%
techMARK (TASX) 4,088.06 1.30%

FTSE 100 - Risers

NMC Health (NMC) 2,620.00p 6.51%
Kingfisher (KGF) 205.30p 4.21%
Evraz (EVR) 371.10p 3.46%
Melrose Industries (MRO) 231.90p 3.25%
Ashtead Group (AHT) 2,398.00p 3.19%
Spirax-Sarco Engineering (SPX) 8,850.00p 3.03%
InterContinental Hotels Group (IHG) 4,892.50p 3.02%
Johnson Matthey (JMAT) 2,926.00p 2.81%
Burberry Group (BRBY) 2,091.00p 2.71%
JD Sports Fashion (JD.) 807.00p 2.44%

FTSE 100 - Fallers

Fresnillo (FRES) 539.60p -3.81%
Imperial Brands (IMB) 1,669.60p -1.21%
Polymetal International (POLY) 1,149.00p -0.52%
Admiral Group (ADM) 2,104.00p -0.47%
Royal Dutch Shell 'A' (RDSA) 2,279.50p -0.26%
Rightmove (RMV) 629.00p -0.25%
Hiscox Limited (DI) (HSX) 1,269.00p -0.16%
Royal Dutch Shell 'B' (RDSB) 2,267.50p -0.07%
Morrison (Wm) Supermarkets (MRW) 200.10p 0.00%
Unilever (ULVR) 4,518.50p 0.04%

FTSE 250 - Risers

Future (FUTR) 1,480.00p 4.67%
Marks & Spencer Group (MKS) 200.80p 4.61%
Spectris (SXS) 2,785.00p 4.50%
NewRiver REIT (NRR) 187.60p 4.45%
Diploma (DPLM) 1,841.00p 4.42%
Grafton Group Units (GFTU) 859.00p 3.89%
Avast (AVST) 450.80p 3.82%
SIG (SHI) 123.60p 3.69%
4Imprint Group (FOUR) 3,080.00p 3.33%
Balfour Beatty (BBY) 223.60p 3.23%

FTSE 250 - Fallers

Restaurant Group (RTN) 133.10p -8.84%
Hochschild Mining (HOC) 160.40p -5.70%
Softcat (SCT) 1,130.00p -2.67%
Vivo Energy (VVO) 120.00p -2.60%
Centamin (DI) (CEY) 109.20p -2.41%
Equiniti Group (EQN) 195.00p -2.39%
Tullow Oil (TLW) 136.25p -2.15%
Petrofac Ltd. (PFC) 392.90p -1.87%
Sirius Minerals (SXX) 3.31p -1.78%
Euromoney Institutional Investor (ERM) 1,256.00p -1.72%