London close: Stocks gain as China fears ease, US GDP revised up

London stocks ended Thursday’s session higher as investors relaxed on China's slowdown and welcomed better-than-expected US economic growth data.

The People’s Bank of China on Wednesday announced it would pump 140bn yuan of stimulus into the economy a day after cutting interest rates, the deposit facility and the reserve rate ratio.

The measures initially failed to lift Chinese stocks, but Thursday’s session ended higher to provide the UK a boost following the previous day’s lows. After Asian markets closed, reports emerged that China's government secretly intervened to bolster equities through the acquisition of blue-chip stocks. Bloomberg cited sources saying that authorities wanted the market to stabilise ahead of a military parade on 3 September celebrating the World War II victory over Japan.

Global stocks plunged on ‘Black Monday’ as investors began to panic about China’s flagging economy. The concerns on the health of the world’s second-largest economy have been growing since the PBoC devalued the yuan on 11 August.

Federal Reserve official William Dudley said on Wednesday at a press conferring that the case for an interest rate hike in September seemed “less compelling” amid the market volatility.

On a positive note for the US, the final reading of second quarter gross domestic product was revised to 3.7% growth from an initial estimate of 2.3%. Economists had pencilled in a 3.2% gain.

“The economy regained a massive amount of momentum in the second quarter and all the evidence from July’s activity and employment data suggests that momentum continued into the third quarter. We still expect third-quarter GDP growth to be around 2.5%,” said Paul Ashworth, chief US economist at Capital Economics.

Meanwhile, US pending home sales edged higher in July, data showed. The index from the National Association of Realtors (NAR) climbed 0.5% month-on-month in July, reversing the previous month's decline and climbing 7.3% year-on-year. Both figures, however, were below the 1.0% month-on-month gain and the 8.4% increase on a yearly basis analysts had expected.

Initial jobless claims in the week ended 22 August initial claims declined by 6,000 to 271,000, according to figures published by the Department of Labor, falling below the 275,000 level analysts expected.

Economic data releases are being closely monitored by the Fed as it assesses whether the US is ready to sustain its first interest rate in nine years.

On the company front, CRH surged after the building materials group posted a 3% rise in first half pre-tax profit to €61m and said it would buy US firm C.R Laurence Co for $1.3bn.

Lonmin snapped an earlier rally after the platinum miner said it has cut 1,400 jobs so far out of an estimated target of 6,000 in an effort to address lower commodity prices.

Other miners, including Anglo American, BHP Billiton, Antofagasta and Rio Tinto, gained as most metals prices advanced.

BHP Billiton was also benefiting from a rating upgrade. Exane BNP Paribas lifted its stance on the stock to ‘neutral’ from ‘underperform’ following the recent correction in the stock.

Petrofac jumped after Societe Generale upgraded its stance on the stock to ‘buy’ from ‘hold’.

Asia-focused Standard Chartered posted strong gains. Brenda Kelly at London Capital Group said: “Emerging market exposure has ground down shares in the bank over the past number of weeks. Given that the average price target is above the £10 marker, and the stock is currently trading at 750p you could say that bargain hunting amongst the financial sector stocks was inevitable.”

Heading the other way, Playtech’s shares went south despite reporting a 19% rise in adjusted first-half net profit as revenues increased amid growth across its businesses.

John Laing Group declined after reporting a 68% drop in pre-tax profits in the first half, as earnings were hit by forex headwinds.

Market Movers

techMARK 3,060.15 +3.08%

FTSE 100 6,192.03 +3.56%

FTSE 250 16,921.95 +1.93%

FTSE 100 - Risers

Anglo American (AAL) 726.30p +9.33%

BHP Billiton (BLT) 1,102.50p +9.21%

Antofagasta (ANTO) 611.50p +8.90%

Standard Chartered (STAN) 757.00p +7.03%

Rio Tinto (RIO) 2,349.00p +6.77%

BP (BP.) 351.20p +6.04%

Shire Plc (SHP) 5,015.00p +5.89%

CRH (CRH) 1,893.00p +5.17%

Royal Dutch Shell 'A' (RDSA) 1,653.50p +4.98%

ARM Holdings (ARM) 918.00p +4.91%

FTSE 100 - Fallers

Whitbread (WTB) 4,776.00p -0.91%

FTSE 250 - Risers

Hunting (HTG) 490.40p +13.26%

Tullow Oil (TLW) 204.40p +8.26%

Premier Oil (PMO) 101.40p +8.16%

Aldermore Group (ALD) 300.00p +7.91%

Petrofac Ltd. (PFC) 853.50p +7.49%

Tate & Lyle (TATE) 538.00p +7.17%

Ophir Energy (OPHR) 94.00p +6.88%

Cairn Energy (CNE) 148.90p +6.81%

Fidelity China Special Situations (FCSS) 120.60p +6.63%

Allied Minds (ALM) 457.70p +6.44%

FTSE 250 - Fallers

OneSavings Bank (OSB) 344.10p -5.44%

Lonmin (LMI) 33.03p -4.18%

Phoenix Group Holdings (DI) (PHNX) 830.00p -3.77%

Rank Group (RNK) 248.70p -3.60%

Petra Diamonds Ltd.(DI) (PDL) 125.00p -3.25%

Playtech (PTEC) 867.00p -2.69%

Clarkson (CKN) 2,280.00p -1.72%

Enterprise Inns (ETI) 118.10p -1.50%

Stagecoach Group (SGC) 359.70p -1.45%

Keller Group (KLR) 983.00p -1.26%

FTSE TechMARK - Risers

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Skyepharma (SKP) 310.00p +6.35%

Torotrak (TRK) 6.05p +5.22%

RM (RM.) 176.38p +3.60%

XP Power Ltd. (DI) (XPP) 1,625.00p +3.50%

KCOM Group (KCOM) 92.50p +2.78%

SDL (SDL) 379.00p +2.78%

E2V Technologies (E2V) 231.75p +2.09%

Spirent Communications (SPT) 77.75p +1.63%

Innovation Group (TIG) 35.25p +1.44%

FTSE TechMARK - Fallers

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Oxford Biomedica (OXB) 8.00p -12.09%

Ricardo (RCDO) 851.00p -4.70%

DRS Data & Research Services (DRS) 12.50p -3.85%

CML Microsystems (CML) 352.50p -2.08%

Sepura (SEPU) 160.25p -0.77%

Oxford Instruments (OXIG) 839.50p -0.71%

NCC Group (NCC) 229.25p -0.65%