MARKET CLOSE
UK shares closed convincingly higher as traders were willing to embrace risk again though equities.
It came as Chinese markets bounced back, easing global fears generally and the Shanghai Composite Index closed 90 points higher after trade data that was better than expected.
Chris Beauchamp, at spreadbetter IG, said: "The global rally in stocks moved up a gear this afternoon. With the fabled St Leger’s Day approaching, and concerns about Federal Reserve tightening receding thanks to a myriad of global problems, it looks like the dip buyers are still stepping in. Once again, bad news has become good news, for stock markets at least."
Financial stocks were taking podium positions, with Standard Chartered (LON:STAN) and Aberdeen Asset Management (LON:ADN) all up. FTSE100 closed around 71 points, or 1.18% higher at 6,146.
The biggest gainer however was commodities giant Glencore (LON:GLEN), up 4.4% to 137.6p after yesterday's statement on spending cuts.
The big FTSE250 story was insurer Amlin (LONAML), whose shares flew almost 33% higher to 655p as it emerged Japan's Mitsui Sumitomo Insurance is set to buy the Lloyds of London insurer for an eye-watering £3.47bn (US$5.3bn).
Under the agreement, Amlin shareholders will receive 670 pence each for their shares, which is a 36% premium over its closing price on Monday.
The biggest laggard on the day was Premier Inn and Costa Coffee owner Whitbread (LON:WTB) reported a damp August and a potential hit from plans to boost the national minimum wage. Its shares fell 1.59% to 4,636p.
Whitbread, which also owns pub restaurants Beefeater and Brewers Fayre, said business during the month was worse than expected due to bad weather and holidays.
Trading also failed to match strong trading during the same period last year.
In small caps, a notable riser was US-focused coal miner Atlantic Coal (LON:ATC), which added 14.29% to 0.16p, while Caza Oil & Gas (LON:CAZA) gained over 21% to 2.125p.
MID-SESSION MARKET UPDATE
London shares built on gains Tuesday as Chinese markets bounced back and European economic data cheered traders.
Stocks in Shanghai finished in positive territory after dealers took heart from better-than-expected trade data.
For August, the country’s imports fell by 13.8% in US dollar denominated terms whilst exports tumbled 5.5%, but the import figures still topped estimates.
IG market analyst David Madden said: "Chinese economic data has been so disappointing lately, dealers will jump on any remotely positive news to justify their bargain hunting."
The FTSE 100 Index rose 86.9 points to 6161. The Dax gained 203 points and the CAC-40 was up 76.7 points.
But some analysts voiced caution, saying they believed the Chinese government may still be manipulating the market by getting traders to buy shares.
Connor Campbell at Spreadex said: "It appears that, for all the statements and reports to the contrary, the Chinese government will continue to get its select band of market warriors to buoy the index and keep up the artifice of a healthy stock market."
Eurozone economic growth in the first and second quarter was better than initially thought, with Q1 GDP being revised up to 0.5% and Q2 up to 0.4%.
On Wall Street, the S&P is expected to open 40 points higher, the Dow Jones Industrial Average 326 points higher and the Nasdaq 90 points higher.
The better-than-expected Chinese import numbers buoyed miners, with Anglo American (LON:AAL) rising 14.4p to 692.1p, Rio Tinto (LON:RIO) advancing 35.5p and BHP Billiton (LON:BLT) increasing 19.5p to 1085p.
Premier Inn and Costa Coffee owner Whitbread (LON:WTB) was 113p off at 4598p as sales took a worse-than-expected hit from a wet August.
Sound Oil (LON:SOU) ticked up 0.25p to 16p on news that preparations for a well at the Tendrara project, onshore Morocco, had reached an advanced stage.
Fastjet shares flew 2p lower to 97.5p as it launched Malawi flights.
Insurer Amlin (LON:AML) soared 162p to 654.5p as it received a takeover bid from Mitsui Sumitomo Insurance.
Cambria Africa (LON:CMB) ticked up 0.32p to 1.15p after trading resumed following publication of the Zimbabawe-focused investor's accounts and half-year results.
MOST FOLLOWED
On the business social media network today it was still Glencore’s spectacular volte face yesterday that was dominating the chat.
Most of the attention was on the hit Ivan Glasenberg’s wallet is going to take after the next two dividends were cut, even before he stumps his share of a US$2.5bn fund raise.
Glasenberg, who has an 8.4% stake in the miner, has seen the value of his stake drop from around US$4.5bn to around US$2.3bn as the metals traders has floundered this year in the face of falling commodity prices.
The foregone dividends will cost the Glencore boss US$210mln, but humbling and humiliation were also words being used to describe the US$10bn programme of fundraising and cuts to prepare the company for a “doomsday programme.”
Many pointed that that just three weeks ago he insisted the company was comfortable with its finances despite racking up a US$676mln loss last year.
The huge initiative, which reportedly was I sited upon by shareholders, will still leave the mining giant with a debt mountain of some US$20bn and some analysts still seem unconvinced.
Deutsche Bank said: “Following discussions with major shareholders, investor confidence in the ability to withstand any further deterioration in conditions has been eroded.”
Glencore’s extreme cost cutting measures will also include asset sales and an equity issue of around US$2.5bn.
“The senior management has committed to maintaining its ownership with the equity issuance, which will account for 22% of the proceeds raised.”
One ray of sunshine was that the copper price rose after the news as Glencore said it will take out 400,000 tonne off the market from Africa.
Away from the beleaguered mining sector, taxi firm Uber has raised US$1.2bn for its expansion into China.
The firm, which has been hit with numerous scandals and allegations, already operates in 11 Chinese cities, but would like to see that number increase by 50 in a year.
Expansion into China has not been smooth for Uber.
In May, police visited its offices in Chengduy and Guangzhou and in August, five drivers were arrested in Hong Kong for “illegal use of vehicles for hire”.
Speaking of China, with investors living on a prayer, hoping for the People’s Bank of China to rectify the mess the stock market is in, it turns out one small respite, two concerts by rock legends Bon Jovi, have been cancelled.
The band allegedly used a picture of the Dalai Lama in a video backdrop in a concert five years ago and so the shows have had the plug pulled.
In the world of gambling, two companies have shown their hand.
Betfair and PaddyPower have reached a £6bn deal to become the completely original and long thought about name Paddy Power Betfair.
Paddy Power, known for controversial marketing stunts including Oscar Pistorius and an impromptu holiday to North Korea with Dennis Rodman, may be toned down a bit after the deal.
It leaves poor old William Hill and 888 on the outside looking in, after a swathe of companies have merged in recent months.
Perhaps it’s time to go back to the negotiating table for the two companies, after the Ladbrokes-Coral, bwin-GVC and now Paddy Power-Betfair have all been made public.
One has to wonder that it will take a big old swallow of pride for William Hill to re-enter negotiations, after having their bid rejected at the eleventh hour by one of 888’s major shareholders.
In the small cap space, Falcon Oil and Gas continues to spud wells that resemble the names of Teletubbies.
The Amungee NW-1 well, in the Beetaloo basin, has now spudded and it aims to follow up the initial success of Kalala S-1.
LONDON OPEN
Traders shrugged off more disappointing Chinese economic data on Tuesday to give the market an early boost.
Recent interventions by the People's Bank of China saw China’s currency reserves shrink by $93.9bn in August, their biggest fall ever, but still much less than expected.
The better-than-expected drop helped to buoy markets, with the FTSE 100 Index climbing 93.62 points to 6168. The Dax gained 186 points and the CAC-40 was up 73.6 points.
For August the country’s imports fell by 13.8% in US dollar denominated terms whilst exports tumbled 5.5%.
Connor Campbell at Spreadex said: "Understandably the Shanghai Composite sharply dropped on the news, only for the index to close up nearly 3% by the end of the day.
"It appears that, for all the statements and reports to the contrary, the Chinese government is going to continue to get its select band of market warriors to buoy the index and keep up the artifice of a healthy stock market."
Premier Inn and Costa Coffee owner Whitbread (LON:WTB) was 131p off at 4580p as it said sales took a worse-than-expected hit from a wet August.
Sound Oil (LON:SOU) ticked up 0.38p to 16.62p on news that preparations for a well at the Tendrara project, onshore Morocco, had reached an advanced stage.
Fastjet shares flew 1.5p lower to 98p as it launched Malawi flights.
Insurer Amlin (LON:AML) soared 162p to 654.5p as it received a takeover bid from Mitsui Sumitomo Insurance.
LONDON PRE-OPEN
Tuesday is set for a steady start, with the FTSE 100 expected to begin just a few points higher.
In Asia, stocks are trading lower following weaker economic stats from China and Japan.
The Shanghai Composite is down some 1.4% at 3,038, while Japan's Nikkei fell 1.6% at 17,556. Hong Kong's Hang Seng meanwhile edged just 0.12% higher.
Having been closed yesterday for the Labor Day holiday Wall Street is currently seen higher, though there are many more hours for pre-market changes.
Oil prices were down again, with Brent below US$48 per barrel and West Texas Intermediary futures almost 4% lower at US$44.33.
The price of gold, meanwhile, was slightly higher at 1,120.
In the Papers
A report in The Daily Telegraph says Japan’s Mitsui Sumitomo Insurance is looking at a possible £2bn bid forAmlin (LON:AML).
The Times says that the new banking tax could bring in twice as much as initially expected. The paper highlights a Ernst & Young report which claims that £12bn could be paid to the Treasury over five years.
A major shareholder of Sports Direct (LON:SPD) won't back Mike Ashley after losing confidence, The Times said.
The Financial Times reports that 888 Holdings (LON:888) is still in the market for acquisitions following its failed bid for Bwin.
It also says that Gazprom's deal to acquire North Sea assets will be scrutinised as Britain aims to send Russia a "clear message" over Ukraine.