London midday: Stocks extend gains as miners rally; Draghi comments provide a boost
London stocks had extended gains by midday on Tuesday, boosted by strength in the mining sector and tracking broader gains in Europe after European Central Bank President Mario Draghi signalled that monetary policy could be eased if inflation does not pick up.
The FTSE 100 was up 0.8% at 7,416.62, with miners the standout gainers as copper prices advanced. Antofagasta, BHP Group and Rio Tinto were all trading higher.
More broadly, the mood was boosted after Draghi said at the ECB Forum in Sintra, Portugal, that additional stimulus will be required unless inflation returns to the Bank's 2% target.
IG market analyst Chris Beauchamp said: "Super Mario is back! Despite only having a few months left to his tenure, the head of the ECB has handed his successor a firmly dovish bias, as he leaves the door open to more QE and renewed negative rates at the ECB in order to try once again to kick-start the eurozone economy.
"Central banks, it seems, like to move in groups. The shift from the antipodean central banks came first, and the ECB moving in the direction of more easing may be followed up tomorrow by a more dovish Fed too."
The Federal Reserve is due to make its latest policy announcement on Wednesday, while the Bank of England's rate announcement is due the day after.
On home shores, sterling was still in the doldrums, trading at its worst level in nearly six months, down 0.1% against the dollar at 1.2525 amid growing worries about a no-deal Brexit. Against the euro, it fared better, up 0.2% at 1.1197 as the single currency lost ground after Draghi's remarks.
Neil Wilson, senior market analyst at Markets.com, said: "Boris Johnson is the clear favourite to become the next PM - in fact it rather looks like he’s going to walk it. Currency markets display fear that he has said he is prepared to take Britain out on October 31 without a deal if needs be.
"The calculus is simple - failure to take Britain out of the EU this year risks a General Election and wipeout at the polls at the hands of the Brexit Party, potentially handing Jeremy Corbyn the keys to Number 10. The EU says it won’t renegotiate (it may have to), MPs won’t accept the existing deal, and Parliament has limited scope to stop this train."
In individual company news, equipment rental firm Ashtead rallied to the top of the FTSE 100 as it posted a 20% jump in full-year pre-tax profit, thanks in part to a strong performance in North America.
AstraZeneca was in the green after the company's cancer drug Lynparza was approved by the European Commission as a first-line maintenance treatment for a type of ovarian cancer.
Telecom Plus rallied as the utility supplier reported a 4.9% increase in full-year profit to £43m.
In broker note action, InterContinental Hotels was knocked lower by a downgrade to 'underweight' at Barclays, while Homeserve was cut to 'equalweight'. Also at Barclays, Derwent London was downgraded to 'underweight'.
Evraz was cut to 'sell' at Citi and Experian was downgraded to 'neutral' at Credit Suisse.
FTSE 100 - Risers
Ashtead Group (AHT) 2,019.00p 2.93%
Severn Trent (SVT) 2,107.00p 2.43%
Antofagasta (ANTO) 880.00p 2.33%
Sainsbury (J) (SBRY) 198.00p 2.19%
Burberry Group (BRBY) 1,790.50p 2.14%
AstraZeneca (AZN) 6,380.00p 2.08%
Tesco (TSCO) 231.40p 1.94%
Sage Group (SGE) 785.10p 1.86%
National Grid (NG.) 844.20p 1.81%
Coca-Cola HBC AG (CDI) (CCH) 2,962.00p 1.72%
FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 722.60p -2.51%
Evraz (EVR) 697.00p -1.75%
Phoenix Group Holdings (PHNX) 676.00p -1.52%
Carnival (CCL) 3,999.00p -1.45%
Johnson Matthey (JMAT) 3,043.00p -1.14%
Royal Bank of Scotland Group (RBS) 211.80p -1.12%
Smurfit Kappa Group (SKG) 2,345.00p -1.01%
NMC Health (NMC) 2,297.00p -0.95%
Imperial Brands (IMB) 1,935.90p -0.79%
Lloyds Banking Group (LLOY) 57.72p -0.38%
FTSE 250 - Risers
Capital & Counties Properties (CAPC) 219.80p 4.92%
Kier Group (KIE) 113.06p 4.69%
Telecom Plus (TEP) 1,516.00p 3.69%
Pennon Group (PNN) 777.80p 2.75%
Acacia Mining (ACA) 174.70p 2.46%
Pets at Home Group (PETS) 180.77p 2.42%
Aston Martin Lagonda Global Holdings (AML) 1,061.40p 2.41%
Just Group (JUST) 54.25p 2.36%
Mitchells & Butlers (MAB) 288.00p 2.13%
Sophos Group (SOPH) 388.70p 1.99%
FTSE 250 - Fallers
Primary Health Properties (PHP) 131.00p -5.76%
Sirius Minerals (SXX) 13.95p -4.78%
Metro Bank (MTRO) 546.00p -3.36%
Plus500 Ltd (DI) (PLUS) 570.00p -3.36%
Go-Ahead Group (GOG) 1,931.00p -2.47%
Cineworld Group (CINE) 279.70p -2.13%
William Hill (WMH) 136.35p -2.05%
BBGI SICAV S.A. (DI) (BBGI) 157.26p -2.02%
Syncona Limited NPV (SYNC) 235.25p -1.98%
Playtech (PTEC) 409.50p -1.75%