London midday: Stocks rise on UK construction data, ECB hopes
- UK construction PMI unexpectedly rises
- Stimulus hopes high ahead of Thusday's ECB meeting
- Weir lifted by Credit Suisse upgrade
- Mining, supermarket stocks provide a lift
techMARK 2,855.10 -0.12%
FTSE 100 6,835.10 +0.14%
FTSE 250 15,970.91 +0.09%
UK stock rose for the third straight session on Tuesday after data showed that growth in the British construction sector unexpectedly accelerated last month.
Heightened geopolitical tensions in Ukraine were limiting gains in London, though investors were on the whole choosing an optimistic approach ahead of Thursday's European Central Bank (ECB) meeting.
Economist Christian Schulz from Berenberg said that many market participants are hoping that the ECB will respond to the recent "economic rough patch [...] with major new stimulus". However, he added: "It will likely deliver, but perhaps not quite as aggressively as some observers hope."
The FTSE 100 was up 0.1% at 6,835 by midday. The index has not closed above this level since 4 July when it settled at 6,866.05.
UK construction growth picks up, US data ahead
The Markit/CIPS UK construction purchasing managers' index (PMI) rose from 62.4 to 64 in August, surprising analysts who had predicted a dip to 61.5.
Howard Archer, an economist at IHG Global Insight, said the "very positive and encouraging survey [...] should help to ensure that gross domestic product (GDP) growth holds up well despite some recent signs of a moderation in manufacturing activity".
However, Archer pointed out that construction output only accounts for 6.3% of GDP so much attention will now be focused on the PMI for the dominant services sector due out on Wednesday which "will provide important evidence as to whether UK growth is losing any momentum overall".
US stock futures were on the rise as Wall Street reopens after a public holiday on Monday and the focus will be on the widely-followed ISM US manufacturing index which is expected to follow in the footsteps of other global production data which showed a slowdown in August. The index, due out at 15:00 is predicted to fall to 56.8 from 57.1 in July.
US construction spending figures are also scheduled and are expected to show that spending increased 0.9% in July after a 1.8% fall in June.
Weir, mining stocks gain
Engineering firm Weir Group jumped after Credit Suisse upgraded the stock from 'neutral' to 'outperform' and hiked its target price from 2,540p to 3,060p. The same bank downgraded sector peer IMI from 'outperform' to 'neutral', saying that Weir offers "a better relative risk return profile" near term.
Mining stocks were performing well with Anglo American, Rio Tinto, BHP Billiton and Glencore were all putting in decent gains.
However, precious metals producer Polymetal inched lower as investors gave a cool reaction to plans to re-prioritise its project pipeline. Following the acquisition of the large Kazakh gold deposit, Kyzyl, earlier in the year, Polymetal has now decided to slow development work at two projects and terminate the Albazino expansion.
Housebuilders were largely out of favour with Barratt Developments, Crest Nicholson and Bovis Homes among the worst performers. Redrow also fell despite lifting annual profits 91% giving a bullish outlook after strong increases to its land bank and order book.
Materials testing group Exova was a high riser as the stock rebounded after some heavy falls over the last few days. Maiden interim results from the company on Friday showed that losses widen significantly in the first half.
Similarly, supermarket stocks J Sainsbury, Wm Morrison and Tesco were attempting to claw their way back after reeling at the news of a profit warning from the latter last week.
FTSE 100 - Risers
Weir Group (WEIR) 2,718.00p +2.99%
Anglo American (AAL) 1,552.50p +1.90%
Glencore (GLEN) 368.70p +1.89%
Tesco (TSCO) 229.45p +1.73%
Sainsbury (J) (SBRY) 294.30p +1.66%
RSA Insurance Group (RSA) 466.50p +1.61%
Aviva (AV.) 524.00p +1.55%
Burberry Group (BRBY) 1,454.00p +1.39%
CRH (CRH) 1,404.00p +1.37%
BHP Billiton (BLT) 1,931.00p +1.36%
FTSE 100 - Fallers
Royal Mail (RMG) 440.30p -1.67%
SSE (SSE) 1,499.00p -1.32%
AstraZeneca (AZN) 4,519.50p -1.27%
Barratt Developments (BDEV) 364.20p -1.25%
BP (BP.) 477.35p -1.11%
United Utilities Group (UU.) 863.50p -1.09%
Randgold Resources Ltd. (RRS) 5,030.00p -1.08%
ITV (ITV) 216.60p -0.96%
Kingfisher (KGF) 306.00p -0.84%
Ashtead Group (AHT) 975.50p -0.76%
FTSE 250 - Risers
Exova Group (EXO) 189.50p +5.10%
Vedanta Resources (VED) 1,050.00p +3.65%
Thomas Cook Group (TCG) 129.00p +2.79%
Hochschild Mining (HOC) 167.50p +2.57%
Serco Group (SRP) 317.70p +2.35%
Wetherspoon (J.D.) (JDW) 758.50p +2.22%
Xaar (XAR) 432.10p +2.15%
RPS Group (RPS) 288.00p +2.13%
Cairn Energy (CNE) 185.80p +2.09%
AL Noor Hospitals Group (ANH) 1,160.00p +2.02%
FTSE 250 - Fallers
Bovis Homes Group (BVS) 831.00p -2.29%
CSR (CSR) 778.50p -2.08%
Crest Nicholson Holdings (CRST) 353.00p -1.94%
Unite Group (UTG) 441.90p -1.80%
Evraz (EVR) 109.90p -1.70%
Rank Group (RNK) 158.30p -1.68%
Redefine International (RDI) 51.55p -1.62%
Galliford Try (GFRD) 1,283.00p -1.61%
Foxtons Group (FOXT) 247.40p -1.47%
Oxford Instruments (OXIG) 1,151.00p -1.46%
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