London midday: Stocks extend gains on vaccine optimism, M&A
London stocks had extended gains by midday on Monday, kicking off the new year in style amid optimism over the latest Covid vaccine rollout, while deal news also provided a boost.
The FTSE 100 was 2.7% higher at 6,633.66 despite worries about another national lockdown.
Neil Wilson, chief market analyst at Markets.com, said: "There is a general risk-on mood and vaccine positivity could be a factor - the UK approved the use of the Oxford University/AstraZeneca vaccine, with half a million doses ready today. It will allow a faster easing of restrictions, but the country looks likely to endure tougher restrictions in the meantime.
"We could also say that the lack of chaos/Armageddon/doomsday from Brexit is also a factor."
On the macroeconomic front, a survey released earlier showed manufacturing activity hit a three-year high in December as factories rushed to finish work before the deadline for Brexit trade talks.
The IHS Markit/CIPS purchasing managers' index rose to 57.5 from November's 55.6. The reading was the highest since November 2017 and slightly ahead of a preliminary estimate of 57.2.
Rob Dobson, IHS Markit's director, said: "The manufacturing PMI rose to its highest level in over three years in December, mainly reflecting a boost from last-minute preparations before the end of the Brexit transition period. It seems likely that this boost will reverse in the opening months of 2021, making for a weak start to the year."
Separate figures from the Bank of England showed mortgage approvals hit their highest level since before the financial crisis in November as buyers rushed to arrange finance during the Chancellor's stamp duty holiday.
Net mortgage borrowing rose to £5.7bn from £4.7bn a month earlier - the highest since March 2016 - and lenders approved 105,000 loans, up from 98,300 in October.
The number of approvals was the most since August 2007 - the month before Northern Rock's near-collapse heralded the credit crunch. November approvals were well ahead of analysts' average forecast of 83,500. Interest rates on newly drawn mortgages rose 5 basis points to 1.83% - little changed since January and up from a low of 1.72% in August.
In equity markets, Entain surged after the Labdrokes owner rejected a proposed offer from its US partner MGM Resorts International valuing it at about £8.1bn. Entain said it had told MGMRI the proposal "significantly undervalues" the company. It has also asked for more information about the strategic rationale for combining the companies.
Precious metals miners were on the rise as gold prices shone, with Fresnillo, Polymetal, Hochschild and Centamin all higher.
Miners also gained in tandem with metals prices, with Anglo, Glencore, BHP and Rio all up.
Travel company Tui shot higher after its chief executive said he expects trading to return to normal this summer.
On the downside, banks and housebuilders lost ground, while Rolls-Royce fell after the Financial Times reported that the engine maker will be putting its UltraFan engine programme "on ice" when testing finishes in 2022.
JD Sports was the biggest loser on the FTSE 100 after a rating downgrade at Exane.
Market Movers
FTSE 100 (UKX) 6,633.66 2.68%
FTSE 250 (MCX) 20,745.67 1.26%
techMARK (TASX) 4,160.27 2.46%
FTSE 100 - Risers
Entain (ENT) 1,455.50p 28.41%
Fresnillo (FRES) 1,240.00p 9.78%
Glencore (GLEN) 250.25p 7.40%
Polymetal International (POLY) 1,795.00p 6.56%
Anglo American (AAL) 2,577.50p 6.31%
BHP Group (BHP) 2,036.00p 5.77%
Rio Tinto (RIO) 5,785.00p 5.76%
Evraz (EVR) 495.70p 5.11%
Johnson Matthey (JMAT) 2,548.00p 5.07%
DCC (DCC) 5,432.00p 4.91%
FTSE 100 - Fallers
JD Sports Fashion (JD.) 822.80p -4.33%
NATWEST GROUP PLC ORD 100P (NWG) 161.90p -3.43%
Taylor Wimpey (TW.) 161.55p -2.56%
Rolls-Royce Holdings (RR.) 109.20p -1.84%
Lloyds Banking Group (LLOY) 35.78p -1.81%
Barratt Developments (BDEV) 664.40p -0.84%
Barclays (BARC) 145.52p -0.79%
Avast (AVST) 536.50p -0.19%
Ferguson (FERG) 8,878.00p -0.07%
Next (NXT) 7,092.00p 0.08%
FTSE 250 - Risers
TUI AG Reg Shs (DI) (TUI) 495.00p 7.98%
Hochschild Mining (HOC) 220.40p 6.06%
Centamin (DI) (CEY) 130.85p 5.78%
Homeserve (HSV) 1,077.00p 5.07%
Ferrexpo (FXPO) 296.20p 4.81%
Dixons Carphone (DC.) 121.00p 4.49%
Elementis (ELM) 119.70p 4.09%
UDG Healthcare Public Limited Company (UDG) 810.50p 3.91%
Electrocomponents (ECM) 904.50p 3.91%
Inchcape (INCH) 668.50p 3.89%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 1,898.00p -5.53%
Crest Nicholson Holdings (CRST) 312.60p -4.05%
Paragon Banking Group (PAG) 472.20p -3.36%
Network International Holdings (NETW) 317.00p -2.94%
Polypipe Group (PLP) 584.00p -2.18%
Greencore Group (GNC) 114.00p -2.15%
Indivior (INDV) 106.50p -2.11%
C&C Group (CCR) 223.00p -1.98%
ICG Enterprise Trust (ICGT) 942.00p -1.67%
Capital & Counties Properties (CAPC) 142.60p -1.66%