London midday: Stocks extend gains as May clings to power with DUP deal
London stocks had extended gains by midday as it emerged that Prime Minister Theresa May has agreed a confidence and supply deal with Northern Ireland's controversial Democratic Unionist Party that will allow her to cling to power.
The FTSE 100 was up 0.7% to 7,474.02, while the pound was up 0.2% against the euro at 1.1389 and 0.3% firmer the dollar at 1.2754.
After two weeks of wrangling, the two parties agreed a deal whereby the DUP's 10 MPs will back the Conservatives in key Commons votes in return for more than £1bn in extra funding for Northern Ireland. The pensions triple lock - which had been under threat in the Tory manifesto - will remain, while plans to means-test the winter fuel allowance have been ditched.
May said: "We share many values in terms of wanting to see prosperity across the UK, the value of the union, the important bond between the different parts of the United Kingdom."
"The agreement we have come to is a very, very good one, and look forward to working with you."
Arlene Foster, whose party is pro-Brexit, anti-abortion and anti-gay rights, was quoted as saying she was "delighted" with the arrangement.
Bank shares in London got a boost as the Italian government was forced to bail out two banks in the Venice region at a cost of £4.6bn. The good assets of Banca Popolare di Vicenza and Veneto Banca will be taken on by Intesa Sanpaolo for €1 while the bad assets will be left on the government's books, in a rescue Prime Minister Paolo Gentiloni said was to ensure "the good health of our banking system".
Spreadex analyst Conor Campbell said: "The Italian banking situation has long been a background concern for its European peers, the issue every now and again bubbling to the surface to spook the markets. The bailout, then, has been greeted with relief by the sector as a whole, even if it has sparked anger from more than a few MEPs, especially in Germany."
Elsewhere, Ultra Electronics pushed higher as it confirmed it was in advanced discussions to acquire NYSE-listed Sparton Corporation, subject to regulator and shareholder approvals.
Amec Foster Wheeler advanced after saying it has completed the sale of its circulating fluidised bed (CFB) boiler business to Sumitomo Heavy Industries for $170m, which will be used to reduce net debt.
Hikma Pharmaceuticals reversed course to trade a little lower as it announced the retirement of Michael Raya, the chief executive officer of the US business, which it said it was splitting into two units - a generics division and an injectables division.
Provident Financial retreated after RBC Capital Markets downgraded its stance on the subprime lender to 'sector perform' from 'outperform' and slashed the price target to 2,650p from 3,400p following the warnings over its consumer credit division last week, which sent the shares sharply lower.
On the data front, the latest figures from the British Bankers' Association showed 40,347 mortgages were approved in May, which was pretty much in line with expectations for 40,300 mortgages to be approved.
The figure was down 3.3% from 40,686 in May last year and slightly lower than the monthly average of 41,923 over the previous six months.
Meanwhile, gross mortgage borrowing in May totalled £13.3bn, in line with recent months and 9% higher than a year earlier. Net mortgage borrowing was 2.4% higher than a year ago while consumer credit annual growth was 5.1% in May compared with 6.4% in April, with the decline driven by weaker growth in personal loans and overdrafts.
Eric Leenders, BBA managing director for Retail Banking, said: "This month’s figures show that in the run up to the General Election, credit growth in personal loans, cards and overdrafts has slowed, which was reflected in lower spending; with increased household costs affecting growth in deposits and saving.
Market Movers
FTSE 100 (UKX) 7,474.02 0.67%
FTSE 250 (MCX) 19,737.17 0.26%
techMARK (TASX) 3,642.97 0.37%
FTSE 100 - Risers
easyJet (EZJ) 1,363.00p 1.94%
AstraZeneca (AZN) 5,499.00p 1.81%
Prudential (PRU) 1,829.50p 1.81%
Legal & General Group (LGEN) 261.80p 1.71%
Standard Life (SL.) 396.10p 1.64%
Royal Bank of Scotland Group (RBS) 249.60p 1.63%
Associated British Foods (ABF) 2,977.00p 1.53%
HSBC Holdings (HSBA) 690.70p 1.47%
Barclays (BARC) 200.35p 1.42%
Standard Chartered (STAN) 749.10p 1.37%
FTSE 100 - Fallers
Provident Financial (PFG) 2,387.00p -2.17%
Fresnillo (FRES) 1,574.00p -1.93%
Rolls-Royce Holdings (RR.) 929.00p -1.38%
Randgold Resources Ltd. (RRS) 7,030.00p -1.19%
Mediclinic International (MDC) 748.00p -1.19%
Informa (INF) 688.50p -0.94%
Smurfit Kappa Group (SKG) 2,341.00p -0.76%
Mondi (MNDI) 2,043.00p -0.73%
Ashtead Group (AHT) 1,614.00p -0.37%
Micro Focus International (MCRO) 2,451.00p -0.37%
FTSE 250 - Risers
Tullow Oil (TLW) 150.00p 3.02%
Capita (CPI) 710.50p 2.75%
Petrofac Ltd. (PFC) 433.10p 2.65%
Vectura Group (VEC) 117.50p 2.62%
Hunting (HTG) 477.70p 2.51%
Serco Group (SRP) 121.70p 2.35%
Just Group (JUST) 131.40p 2.34%
Cineworld Group (CINE) 697.00p 2.20%
McCarthy & Stone (MCS) 174.10p 2.05%
Evraz (EVR) 193.40p 1.95%
FTSE 250 - Fallers
William Hill (WMH) 264.90p -3.50%
Sirius Minerals (SXX) 32.26p -2.74%
Jupiter Fund Management (JUP) 497.70p -2.03%
Petra Diamonds Ltd.(DI) (PDL) 112.90p -1.83%
Playtech (PTEC) 1,000.00p -1.57%
Ted Baker (TED) 2,380.00p -1.57%
TBC Bank Group (TBCG) 1,644.00p -1.44%
Softcat (SCT) 398.60p -1.43%
Sanne Group (SNN) 625.00p -1.42%
Centamin (DI) (CEY) 162.70p -1.39%