London midday: Chinese stimulus boosts miners, IHG gains

Stimulus measures to spur bank lending in China gave UK stock markets a boost on Monday morning, with mining shares leading the charge after a sell-off the previous session.

London's FTSE 100 was up 0.7% at 7,041.74 by midday, pulling back after hitting a high of 7,067.84 early on.

The index dropped 0.9% on Friday to 6,994.63, its first close below 7,000 since 8 April, as a Bloomberg terminal outage and a change to short-selling regulations in China sparked volatility across global financial markets.

The People's Bank of China, under pressure to boost growth following a recent batch of weak economic data, this weekend lowered its reserve requirement ratio by one percentage point. The move, which was the most aggressive cut since 2008, was twice as much as some analysts had expected.

"Many in the markets are interpreting the 1% size of the cut as a signal that more is in the pipeline to come, and this should ease the red tape for Chinese banks and increase the growing Western trend of middle class indebtedness in the Asian powerhouse," said IG analyst Alastair McCaig.

Developments in Greece continued to be in focus as the Eurogroup meets this week to discuss the reform package Athens needs to present in exchange for a further €7.2bn bailout tranche. The International Monetary Fund said on Monday that it is "hopeful" of a solution to discussions.

In economic data, Rightmove said house prices in the UK rose 1.6% to a new record high of £286,133 in April, while construction output in the Eurozone declined by 1.8% in February led by a drop in civil engineering.

Miners gain, IHG up on M&A speculation

Miners such as Anglo American, Rio Tinto, BHP Billiton and Antofagasta were rising strongly as stimulus measures in China spurred buying across the sector.

Russia-focused steel producer Evraz also rose after reporting stable output levels in the first quarter of 2015, though it did warn that production will drop over the next three months due to scheduled maintenance works.

Hotels group IHG was also on the up as the stock extended gains made Friday on rumours that it could merger with US peer Starwood Hotels & Resorts.

Oilfield services outfit Petrofac dropped after saying it expects to recognise a further loss of $195m in 2015 for the Laggan-Tormore gas plant project on Shetland. The company, which had already recognised a $230m loss on the project in 2014, told investors earlier this year that it did not foresee a further profit or loss over the remainder of the contract duration.

After an earlier rise, engineering software group Aveva dropped into the red with investors underwhelmed by a short, albeit positive, pre-close trading update which said annual results should meet analysts' forecasts.

Polymer products group Victrex was advancing after Exane BNP Paribas lifted its rating on the stock to 'outperform'.

Market Movers
techMARK 3,208.17 +0.42%
FTSE 100 7,041.74 +0.67%
FTSE 250 17,572.31 -0.00%

FTSE 100 - Risers
Anglo American (AAL) 1,042.50p +3.17%
Ashtead Group (AHT) 1,141.00p +2.61%
InterContinental Hotels Group (IHG) 2,777.00p +2.02%
Rio Tinto (RIO) 2,856.50p +1.98%
BHP Billiton (BLT) 1,471.00p +1.73%
HSBC Holdings (HSBA) 610.00p +1.67%
Prudential (PRU) 1,662.00p +1.56%
Pearson (PSON) 1,376.00p +1.55%
ARM Holdings (ARM) 1,143.00p +1.42%
Smith & Nephew (SN.) 1,152.00p +1.41%

FTSE 100 - Fallers
Persimmon (PSN) 1,711.00p -1.27%
G4S (GFS) 295.20p -1.01%
Capita (CPI) 1,110.00p -0.98%
Centrica (CNA) 257.60p -0.96%
Coca-Cola HBC AG (CDI) (CCH) 1,347.00p -0.81%
BAE Systems (BA.) 509.50p -0.68%
Reckitt Benckiser Group (RB.) 5,900.00p -0.67%
RSA Insurance Group (RSA) 423.20p -0.56%
Tesco (TSCO) 235.45p -0.53%
Royal Mail (RMG) 443.30p -0.52%

FTSE 250 - Risers
Imagination Technologies Group (IMG) 211.50p +4.44%
Northgate (NTG) 651.00p +3.91%
Vedanta Resources (VED) 571.50p +3.63%
Kaz Minerals (KAZ) 233.30p +2.41%
Bwin.party Digital Entertainment (BPTY) 80.60p +2.15%
Victrex plc (VCT) 2,038.00p +2.00%
Clarkson (CKN) 2,258.00p +1.90%
Home Retail Group (HOME) 173.30p +1.82%
Zoopla Property Group (WI) (ZPLA) 191.50p +1.75%
Debenhams (DEB) 88.90p +1.48%

FTSE 250 - Fallers
Petrofac Ltd. (PFC) 895.50p -11.69%
Hunting (HTG) 599.50p -2.52%
AL Noor Hospitals Group (ANH) 880.00p -2.22%
Bank of Georgia Holdings (BGEO) 1,996.00p -2.16%
SSP Group (SSPG) 297.40p -1.91%
Aveva Group (AVV) 1,570.00p -1.88%
Enterprise Inns (ETI) 114.20p -1.72%
Mitie Group (MTO) 287.90p -1.67%
Drax Group (DRX) 399.10p -1.65%
Fidessa Group (FDSA) 2,295.00p -1.54%