London midday: Stocks maintain gains amid trade hopes

London stocks were still firmly in the green by midday on Monday, with miners on the rise amid renewed hopes over a China-US trade deal.

The FTSE 100 was up 0.8% at 7,385.77, 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 Chris Beauchamp said: "Crucially, polling in Scotland points to a (mostly) ideal scenario for the Conservatives - while they may lose one seat, and the SNP see their total increase, the loss of more Labour seats further undermines Jeremy Corbyn’s quest for power.

"So far the manifesto launch for the Tories has avoided the slip-ups that doomed the 2017 campaign, providing further hope for markets that Boris will still be PM after the election. Such hopes continue to underpin the gains in sterling, regardless of the likely problems of 2020 when the next Brexit negotiations kick off.

The pound was up 0.4% against the dollar and the euro at 1.2880 and 1.1694, respectively.

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 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) 7,385.77 0.80%
FTSE 250 (MCX) 20,629.95 0.70%
techMARK (TASX) 4,067.50 0.79%

FTSE 100 - Risers

NMC Health (NMC) 2,558.00p 4.03%
Evraz (EVR) 372.80p 3.93%
Kingfisher (KGF) 202.40p 2.74%
Burberry Group (BRBY) 2,087.00p 2.66%
JD Sports Fashion (JD.) 805.60p 2.26%
Ashtead Group (AHT) 2,373.00p 2.15%
Royal Bank of Scotland Group (RBS) 229.70p 2.13%
Ocado Group (OCDO) 1,150.00p 2.09%
Melrose Industries (MRO) 229.30p 1.96%
InterContinental Hotels Group (IHG) 4,841.50p 1.95%

FTSE 100 - Fallers

Fresnillo (FRES) 542.80p -3.24%
Polymetal International (POLY) 1,151.50p -0.52%
Unilever (ULVR) 4,508.00p -0.19%
GlaxoSmithKline (GSK) 1,713.00p -0.05%
TUI AG Reg Shs (DI) (TUI) 1,075.00p 0.00%
Royal Dutch Shell 'A' (RDSA) 2,285.00p 0.15%
Royal Dutch Shell 'B' (RDSB) 2,273.50p 0.20%
Vodafone Group (VOD) 156.96p 0.24%
Morrison (Wm) Supermarkets (MRW) 200.60p 0.25%
Johnson Matthey (JMAT) 2,854.00p 0.28%

FTSE 250 - Risers

Marks & Spencer Group (MKS) 198.15p 3.23%
4Imprint Group (FOUR) 3,090.00p 3.00%
Diploma (DPLM) 1,816.00p 2.83%
Grafton Group Units (GFTU) 858.00p 2.82%
Spectris (SXS) 2,740.00p 2.81%
Ferrexpo (FXPO) 148.95p 2.62%
Sanne Group (SNN) 596.00p 2.58%
Future (FUTR) 1,450.00p 2.55%
Countryside Properties (CSP) 384.60p 2.51%
Pagegroup (PAGE) 478.20p 2.49%

FTSE 250 - Fallers

Signature Aviation (SIG) 316.60p -19.54%
Restaurant Group (RTN) 136.40p -6.58%
Hochschild Mining (HOC) 159.50p -6.23%
Centamin (DI) (CEY) 108.95p -2.64%
Vivo Energy (VVO) 120.20p -2.44%
Equiniti Group (EQN) 196.50p -2.24%
Petrofac Ltd. (PFC) 392.20p -2.05%
NextEnergy Solar Fund Limited Red (NESF) 121.00p -1.63%
Softcat (SCT) 1,146.00p -1.29%
AVI Global Trust (AGT) 764.00p -1.16%