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viewAmec Foster Wheeler

London shares rise as US and Chinese markets rebound

Chinese markets rose "as state-directed investors bought shares"

BP_north_american_gas_opt_55df053fbc281.jpg
Oil majors rose as crude prices gushed higher

MID-SESSION MARKET WRAP

London shares built on gains on Thursday as global markets recovered and commodity prices firmed.

UK and mainland European markets recovered this week’s losses after rallying on Thursday morning while futures pointed to another strong open for US stocks ahead of the latest revision to second quarter growth figures.

The FTSE 100 Index rose 135.38 points to 6114, Frankfurt's DAX lifted 272 points and France's CAC-40 increased 116 points.

The Shanghai Composite recovered from earlier losses on Thursday to stand 5.3% up by the close.

But analysts said the rise may not have been all it seemed, with reports claiming that state-directed investors had bought stock to ensure a positive trading close.

Connor Campbell at Spreadex cited reports saying Beijing wanted stocks to rise to prevent any distraction from next week's World War II victory over Japan parade.

The prices of a barrel of Brent and US light crude were both up about 3.5%, taking the latter to just shy of US$40.

In equities, oil giant BP (LON:BP.) benefited from the higher crude price with a 9.55p bounce to 340.75p while Royal Dutch Shell (LON:RDSB) gushed 35.5p to 1621p.

Miners were also making progress on the China news and rising prices of gold and copper. Anglo American (LON:AAL) rose 29.8p to 694.1p, Rio Tinto (LON:RIO) strengthened 58.5p to 2258.5p and BHP Billiton (LON:BLT) hardened 36p to 1045.5p.

Speculation that the US Federal Reserve will hold back from raising interest rates next month also lifted sentiment.

Michael Hewson at CMC Markets said: "Now the talk is less of when the Fed will raise rates but more of whether they should, or even whether they should implement further easing in the form of QE4."

Recruitment firm Hays (LON:HAS) rose 2.6p to 156.8p as it reported 17% headline growth in annual operating profit despite a £9.6mln foreign exchange headwind.

Gold miner Petropavlovsk (LON:POG) sparkled 0.04p to 5.74p after forecasting significantly higher second-half production.

Sierra Rutile (LON:SRX) subsided 1.75p to 20.5p on news of a first-half loss, although it said falling costs had put it on track to hit full-year targets.

Atlantic Coal (LON:ATC) heated up 0.12p to 0.2p on news of higher sales and profits from American mines.

Oil services group Lamprell (LON:LAM) leaked 5.5p to 123.75p as it completed fewer major projects than in 2014 and launched a review to adjust costs to lower oil prices.

LONDON OPEN

Rising global stock markets and oil prices helped London shares to get off to a strong start on Thursday.

The Dow Jones Industrial Average gained 620 points to 16286 and the Shanghai Composite advanced 5.3%.

The prices of a barrel of Brent and US light crude were both up nearly 4%, taking the latter to more than US$40.

The FTSE 100 Index rose 121.68 points to 6100, Frankfurt's DAX lifted 280 points and France's CAC-40 increased 112 points.

In equities, oil giant BP (LON:BP.) benefited from the higher crude price with a 8.15p bounce to 339.35p while Royal Dutch Shell (LON:RDSB) gushed 36.5p to 1622p.

Miners were also making progress on the China news. Anglo American (LON:AAL) rose 36.7p to 701p, Rio Tinto (LON:RIO) strengthened 72p to 2272p and BHP Billiton (LON:BLT) hardened 46p to 1055.5p.

Speculation that the US Federal Reserve will hold back from raising interest rates next month also lifted sentiment.

Michael Hewson at CMC Markets said: "Now the talk is less of when the Fed will raise rates but more of whether they should, or even whether they should implement further easing in the form of QE4."

In corporate news, recruitment firm Hays (LON:HAS) rose 2.9p to 157.1p as it reported 17% headline growth in annual operating profit despite a £9.6mln foreign exchange headwind.

Gold miner Petropavlovsk (LON:POG) sparkled 0.17p to 5.87p after forecasting significantly higher second-half production.

Sierra Rutile (LON:SRX) subsided 1.5p to 20.75p on news of a first-half loss, although it said falling costs had put it on track to hit full-year targets.

MARKET PREVIEW

The FTSE 100 is expected to open more than 1% higher on Thursday as investors continue to rediscover some confidence.

Further stimulation in China - an injection of liquidity - has driven drove global stocks higher.

The Shanghai Composite index was up around 1.3% at 2,965 while Hong Kong’s Hang Seng gained over 2% to 21,565.

Australia’s ASX 200 advanced around 1.4% to 5,245.

Last night Wall Street closed strongly. The Dow Jones soared nearly 4%, adding more than 600 points to 16,285. The S&P 500 was up 3.9% at 1,940 and the Nasdaq gained 4.24% to 4,697.

Craig Erlam, analyst at OANDA, says there’s a perception of stability in Chinese markets, for now at least.

“Of course, as we’ve seen repeatedly and not just in China, these gains can be rapidly reversed and investor behavior into the close today will tell us a lot about just how much anxiety there still is,” he said in a note.

“For now, investors in the US and Europe appear content with the stabilization efforts of the PBOC which is setting us up for a more positive end to the week.”

In London, CFD and spreadbet provider IG Markets is calling the FTSE 100 some 85 points higher at 6,085 to 6,090.

Thursday corporate news highlights include:

Interims: Aldermore Group (LON:ALD), Allied Minds  (LON:ALM), Amec Foster Wheeler (LON:AMFW), Cairn Homes (LON:CRN), Evraz (LON:EVR), Gulf Keystone Petroleum (LON:GKP),  Hunting (LON:HTG), IFG Group (LON:IFP), Lamprell (LON:LAM),  Oxford Biomedica (LON:OXB), Petropavlovsk (LON:POG), Playtech (LON:PTEC), PV Crystalox Solar (LON:PVCS), Signet Jewelers (LON:SIG), Xaar (LON:XAR)

Final: Hays (LON:HAS)

The following widely-held stocks are trading ex-dividend on Thursday: Acacia Mining, Hikma, Intercontinental Hotels, Imperial Tobacco, Lancashire Holdings, London Stock Exchange, Rank Group, Rexam, Stagecoach, and Tullow Oil

Quick facts: Amec Foster Wheeler

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