London open: Rolls-Royce and banks lead FTSE bounce

Led by a relief rally in Rolls-Royce and banking stocks, shares in the UK's blue chips threw off the negative market sentiment and bounced back strongly after hitting three-year lows the day before.

Overnight, US stocks lost more than 1% while in Asia the Nikkei capped its worst week, closing down 4.84%, and the Hang Seng ended 1.22% lower.

However, the UK benchmark was driven higher as Rolls-Royce rallied by an initial 13% after the aircraft engine maker kept its 2016 guidance unchanged and halved its dividend, with 2015 profits and cash flow not as bad as analysts had feared.

After a precipitous fall on Thursday morning, banking stocks rebounded, helped by a reassuring surge from Germany's Commerzbank as it latest quarterly results impressed.

German GDP also allayed some fears about Deutsche Bank as it hit its target 0.3% growth mark, with CPI inflation also in line at 0.5%.

Another possible boost for the financial sector was the vote of confidence from JP Morgan chief executive Jamie Dimon as he splashed out on $26m worth of the bank’s shares.

Firmer oil prices were another stimulant, boosted by comments from Saudi Arabia’s energy minister that have fuelled hopes of a coordinated production cut by OPEC members.

West Texas Intermediate was up 3% at $26.99 a barrel while Brent crude was 2.9% higher at $30.94, helping to push the Stoxx 600 oil and gas index up 2.9%.

"As another nerve shredding week draws to a close there appears to be some mild relief for investors as equities try to drive higher," said Mike McCudden at broker Interactive Investor.

"However, it may take some time before investors are truly convinced that a move back in to riskier assets is worthwhile, as the market turmoil emanating from Asia and the euro zone shows no sign of going away any time soon. With a raft of economic data due today as well as an Ecofin meeting, we may yet see some more turbulence as we head in to the weekend break."

Data out later today includes UK December construction output, European December industrial production, EC updated fourth quarter GDP, and in the US the major data point of the day could be January's US retail sales numbers, where expectations are for no change over the month after a 0.1% decline in December. December business inventories and flash February University of Michigan consumer sentiment are also due.

UK larger-cap company news was thin on the ground, with the main faller being clothes retailer Supergroup, after founder Julian Dunkerton cut his stake.

Reports were that Dunkerton sold the 4.9% stake worth £53m, his first share sale since the fashion retailer listed on the stock market six years ago, in order to fund a recent divorce settlement.

Market Movers

FTSE 100 (UKX) 5,611.07 1.34%
FTSE 250 (MCX) 15,276.93 0.65%
techMARK (TASX) 2,893.09 0.65%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 586.00p 10.57%
Anglo American (AAL) 340.50p 7.77%
Standard Chartered (STAN) 409.70p 5.96%
Worldpay Group (WI) (WPG) 285.00p 5.56%
Glencore (GLEN) 91.89p 4.80%
BHP Billiton (BLT) 661.10p 4.26%
Barclays (BARC) 153.85p 4.06%
Berkeley Group Holdings (The) (BKG) 3,130.00p 3.78%
Rio Tinto (RIO) 1,762.50p 3.37%
Provident Financial (PFG) 2,899.00p 3.20%

FTSE 100 - Fallers

Persimmon (PSN) 1,861.00p -0.59%
Relx plc (REL) 1,128.00p -0.35%
BT Group (BT.A) 448.95p -0.33%
Sky (SKY) 974.00p -0.20%
Imperial Brands (IMB) 3,581.00p -0.18%
Taylor Wimpey (TW.) 168.60p -0.12%
British American Tobacco (BATS) 3,678.00p -0.08%
SABMiller (SAB) 4,131.00p -0.05%
Barratt Developments (BDEV) 542.50p -0.00%
National Grid (NG.) 932.40p 0.05%

FTSE 250 - Risers

Berendsen (BRSN) 1,111.00p 4.32%
Cairn Energy (CNE) 146.00p 3.99%
Weir Group (WEIR) 822.50p 3.92%
Tullow Oil (TLW) 152.80p 3.66%
Investec (INVP) 416.10p 3.33%
Petrofac Ltd. (PFC) 695.50p 3.19%
Senior (SNR) 198.70p 2.90%
Evraz (EVR) 66.45p 2.78%
Zoopla Property Group (WI) (ZPLA) 216.10p 2.66%
Home Retail Group (HOME) 150.90p 2.65%

FTSE 250 - Fallers

Supergroup (SGP) 1,217.00p -8.43%
Henderson Group (HGG) 213.00p -7.03%
AO World (AO.) 158.60p -2.70%
Tritax Big Box Reit (BBOX) 124.10p -2.59%
Atkins (WS) (ATK) 1,160.00p -2.27%
Allied Minds (ALM) 302.70p -2.04%
CLS Holdings (CLI) 1,380.00p -1.99%
Fidelity China Special Situations (FCSS) 109.00p -1.36%
Ibstock (IBST) 202.00p -1.17%
Sophos Group (SOPH) 180.00p -0.94%