London close: FTSE climbs back above 7,000

London stocks mounted a spirited fightback along with their European allies to counter the overnight onslaught on Wall Street and in Asia, helped by some solid company updates and a softer pound and euro.

The FTSE 100 recovered 41 points or 0.6% lost earlier in the week to close at 7,004.10, while the pound made a late slide of 0.5% against the dollar to 1.2818 and 0.3% versus the euro to 1.1274.

European indices fared even better, however, despite heavy losses in the US and Asia, as investors eyed the latest policy announcement from the European Central Bank. The resilience of European markets was attributed in part to reports that the Italian government is prepared to step in and help struggling banks with rising bond yields.

According to reports, Deputy Prime Minister Matteo Salvini has pledged support for any company or bank that needs it.

IG's chief market analyst, Chris Beauchamp, said: "Somewhat contrary to expectations, a strange calm has descended across European markets, belying the volatility of the US and Asian sessions. US futures are looking perkier, and European indices are holding their ground for the time being. The problem is that most of the selling of late has taken place in the US, and until American investors have decided to stop selling and start buying, European markets will remain under pressure."

The euro dropped against the dollar after the European Central Bank's meeting and press conference, with little emerging to appease fears over the standoff between the EU and Italy. ECB chief Mario Draghi remained pretty tight lipped on monetary policy.

Neil Wilson at Markets.com felt Draghi was fairly dovish, "teeing up in a fairly subtle fashion that the ECB is starting to fret over risks and will be ready to push back on rate expectations at the next meeting".

He added: "The key question though for the market – does the ECB consider core or headline inflation more important? That is still not entirely clear and leaves a degree of ambiguity around the inflation target and convergence process. This is an ambiguity that the ECB needs to acknowledge and resolve."

In UK corporate news, Lloyds Banking Group was in the green as it reported flat underlying profits for the third quarter and revealed that chief financial officer George Culmer will retire next year.

Kaz Minerals surged as it reported a jump in third-quarter copper production while Aveva rose after the engineering and industrial software provider said it continued to perform well in the first half of its financial year.

Polypipe reversed its earlier course to trade sharply higher after announcing the acquisition of Manthorpe Building Products, which makes moulded and extruded plastic and metal products for the UK and Irish markets, for £52m.

Relx ticked up after reporting a 4% increase in nine-month underlying revenue while chemicals company Elementis gained after saying it had delivered a "resilient" third quarter.

Evraz was stronger even though the steel maker said consolidated output fell 10.3% in the third quarter.

IAG was flying higher ahead of its quarterly update at the end of the week, while Smurfit Kappa and Mondi were lifted as investors read across from results of US rival International Paper.

Imperial Brands and British American Tobacco were on the up as investors noted US rival Altria, the maker of Marlboro cigarettes, said it was pulling several of its vaping products off the shelves ahead of possible ban of e-cigarettes to young people in the US.

Outside the FTSE 350, embattled department store group Debenhams hit a new all-time low in early trading but pushed higher as it unveiled more aggressive restructuring plans, with up to 50 stores to be closed in the coming three-to-five years.

On the downside, advertising group WPP tumbled as it posted a drop in third-quarter revenues, cut its full-year revenue guidance and announced plans to sell a stake in its data division.

Hastings Group also suffered heavy losses as the insurer reported a rise in nine-month gross written premiums but struck a cautious note on the wider outlook for the market.

The appointment of Philip Jansen, ex of Worldpay, as new chief executive of BT Group did nothing to help the shares.

In broker note action, Rolls-Royce was upgrade by Oddo to 'buy' from 'neutral', Segro was upgraded to 'add' at AlphaValue. Anglo American was boosted to 'buy' at SocGen, which also cut Rio Tinto to 'hold'.

Informa was upgraded to 'add' at Peel Hunt and CYBG was bumped up to 'neutral' from 'sell' at UBS.

Ferguson, ITV, Rolls-Royce, Coats, Dechra, Howden Joinery, JD Wetherspoon and William Hill were among the companies whose stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,004.10 0.59%
FTSE 250 (MCX) 18,531.53 0.68%
techMARK (TASX) 3,255.94 -0.30%

FTSE 100 - Risers

Smiths Group (SMIN) 1,332.50p 3.86%
International Consolidated Airlines Group SA (CDI) (IAG) 587.40p 3.82%
Rolls-Royce Holdings (RR.) 872.00p 3.81%
Imperial Brands (IMB) 2,743.50p 3.70%
Smurfit Kappa Group (SKG) 2,512.00p 3.63%
Bunzl (BNZL) 2,275.00p 3.50%
Mondi (MNDI) 1,801.00p 3.21%
Rentokil Initial (RTO) 293.80p 3.16%
Ocado Group (OCDO) 826.40p 3.15%
Just Eat (JE.) 608.20p 3.05%

FTSE 100 - Fallers

WPP (WPP) 910.80p -13.75%
ITV (ITV) 145.20p -3.94%
BT Group (BT.A) 240.55p -3.86%
Randgold Resources Ltd. (RRS) 6,198.00p -3.34%
Fresnillo (FRES) 911.00p -2.88%
AstraZeneca (AZN) 5,812.00p -2.01%
Micro Focus International (MCRO) 1,245.50p -1.77%
Admiral Group (ADM) 1,945.00p -1.64%
Direct Line Insurance Group (DLG) 324.10p -1.61%
GlaxoSmithKline (GSK) 1,532.20p -1.31%

FTSE 250 - Risers

Just Group (JUST) 83.40p 12.17%
Polypipe Group (PLP) 343.80p 11.70%
Kaz Minerals (KAZ) 483.90p 8.26%
Cairn Energy (CNE) 196.00p 5.09%
Wizz Air Holdings (WIZZ) 2,553.00p 5.06%
AA (AA.) 103.45p 4.90%
Hill & Smith Holdings (HILS) 944.00p 4.60%
Essentra (ESNT) 361.40p 4.51%
Thomas Cook Group (TCG) 45.39p 4.30%
CYBG (CYBG) 263.80p 4.27%

FTSE 250 - Fallers

Hastings Group Holdings (HSTG) 190.30p -13.66%
Stobart Group Ltd. (STOB) 208.00p -4.59%
Vivo Energy (VVO) 112.22p -3.01%
Energean Oil & Gas (ENOG) 591.00p -2.96%
BTG (BTG) 521.00p -2.80%
Synthomer (SYNT) 420.40p -2.55%
Metro Bank (MTRO) 2,202.00p -2.48%
IP Group (IPO) 107.80p -2.36%
Moneysupermarket.com Group (MONY) 287.30p -2.35%
Saga (SAGA) 125.20p -2.26%