London’s blue-chip stocks rebounded today as mining stocks surged ahead following a brutal day on Tuesday for the sector.
Joshua Mahony at IG, said: “Volatility is the name of the game in financial markets, perfectly personified today by the FTSE 100, which is trading within a near 200-point range for the second consecutive day.”
In Europe, Germany's Dax climbed 53 points to 9,623 and France's CAC-40 lifted 15 points to 4,442.
The FTSE100 meanwhile, ended 1.6%, or 96.4 points higher at 6,032.
The US markets weren’t as willing to overlook the day’s negative news as their European counterparts, with the Dow dipping its toes in the red as the bell rang on Wall Street.
Around midday, the Dow Jones was down 0.1% at 16,319, while the S&P 500 was up less than 0.1% at 1,943 a couple of points and the Nasdaq spiked 0.3% to 4,770.
Elsewhere, data out of Beijing showed a sharp fall in China’s manufacturing sector, following Tuesday's announcement that the Asian Development Bank had dropped its growth forecast for China for this year from 7.2% to 6.8%.
But some economists, such as those at Capital Economics, said the gloomy reaction may have been overdone because the effects of Chinese economic stimulus were still to be felt.
Investors in miners took a similar view, boosting shares in the sector. Anglo American (LON:AAL) increased 18.3p to 666.4p, BHP Billiton (LON:BLT) strengthened 28p to 1049.5p and Rio Tinto (LON:RIO) rose 62p to 2256p.
On the corporate front, GlaxoSmithKline (LON:GSK) was 30p, or 2.5%, healthier at 1,271p on upbeat results from tests of its ViiV Healthcare joint venture's Triumeq HIV treatment.
Meanwhile, Premier Oil (LON:PMO) spurted 5.8p to 69.4p as the oil firm said production is running ahead of full-year guidance as it focuses on reducing costs to deal with the lower oil price.
In small caps, Hague and London Oil (LON:HNL) was the biggest riser of the day, gaining 171% to 18p.
The company has agreed to buy 85% of a project in the Natuna Sea, between Indonesia and the Philippines, for an initial commitment of US$500,000.
The contract includes the undeveloped Mako natural gas discovery which has an initial estimate of gas in place of 902bn gross cubic feet.
Conversely, Vmoto Limited (LON:VMT) was one of the day’s biggest faller as it issued a profit warning after selling its Nanjing Haiyong electric vehicle controller operations for around RMB2mln. #
“While the strategic rationale for the original acquisition was sound, the Nanjing Haiyong business did not deliver the returns expected,” the company said.
Shares dropped 12.1% to 14.5p as it said it is focusing on its core electric bike product instead.
Elsewhere, Surrey County Council’s Planning & Regulatory Committee has given Europa Oil & Gas (LON:EOG) permission for an underground drilling corridor at its Holmwood project in the Weald basin. Shares rose 3.7% to 3.5p.
Lunchtime Report
Top flight shares built on gains on Wednesday as investors regained confidence in the European automotive sector following the Volkswagen debacle.
The FTSE 100 Index advanced 91.27 points to 6027 on more positive sentiment as shares in car makers recovered their poise.
Analysts speculated that chief executive Martin Winterkorn might carry the can for the company's alleged manipulation of car emission system data.
Connor Campbell at spread-betting firm Spreadex said: "Somehow VW chief executive Martin Winterkorn is still at the helm of the company, an astonishing fact given that due to actions under his watch the company faces a world-wide investigation AND a likely class action lawsuit; it will be interesting to see if he is there by the end of the week."
Germany's Dax climbed 77 points and France's CAC-40 lifted 30 points.
Data out of Beijing showed a sharp fall in China’s manufacturing sector, following Tuesday's announcement that the Asian Development Bank had dropped its growth forecast for China for this year from 7.2% to 6.8%.
But some economists, such as those at Capital Economics, said the gloomy reaction may have been overdone because the effects of Chinese economic stimulus were still to be felt.
Investors in miners took a similar view, boosting shares in the sector. Anglo American (LON:AAL) increased 18.3p to 666.4p, BHP Billiton (LON:BLT) strengthened 28p to 1049.5p and Rio Tinto (LON:RIO) rose 62p to 2256p.
Traders appeared to take heart from upbeat eurozone manufacturing and services data, pointed to steady growth of the single currency area's economy at the end of the third quarter.
Howard Archer at IHS Global Insight said: "The composite manufacturing and services output index for the Eurozone eased back to 53.9 in September after rising to a 5-month high of 54.3 in August from 53.9 in July.
"This meant the composite output index averaged 54.0 in the third quarter, which was marginally above the second quarter average of 53.9 and was actually the best quarterly performance since the second quarter of 2011."
In the US, US purchasing managers' index manufacturing figures came in at 53, which research group Markit said represented a near-stalling of the sector.
Back in London, Premier Oil (LON:PMO) spurted 5.8p to 69.4p as the oil & gas group reported production ahead of full year guidance.
Shares in north-west water supplier United Utilities gushed 13.5p to 890p on news of trading in line with hopes despite a £25mln compensation bill for disruption caused by a cryptosporidium outbreak in Lancashire.
GlaxoSmithKline (LON:GSK) was 24p healthier at 1271p on upbeat results from tests of its ViiV Healthcare joint venture's Triumeq HIV treatment.
Medical device and x-ray scanner company Smiths Group (LON:SMIN) gained 11p to 1040p as it reported the best revenue increase from its medical business in nearly a decade.
Real Good Food (LON:RGD) soured a penny to 51p after it blamed commodity price falls for lower revenue.
Investors gave their stamp of approval to philatelic dealer Stanley Gibbons (LON:SGI) as it said it may miss first-half targets but was confident of meeting full-year expectations. Shares rose 6p to 160p.
Kibo Mining (LON:KIBO) hardened 0.25p to 6p on news that a Tanzanian uranium joint venture had started work and it forecast a positive shift in the uranium market.
MARKET PREVIEW
London was set for another tough morning as markets in Asia and the US fell heavily again overnight.
FTSE 100 will drop more than 50 points at the open according to financial spread bet firms and following the 173 point or near 3% drop to 5,936 Tuesday.
Miners bore the brunt or the decline due to concerns over China and they were also weak in the US, where the Dow Jones Industrial Average tumbled 180 points to 16,330.
The two other main indices, Nasdaq and the S&P 500, registered even larger proportionate falls.
Sparking the declines overnight was another set disappointing data out of China, where the Caixin manufacturing PMI hit 47, its lowest level since just after the financial crash of 2009.
Asian markets also reacted badly, with heavy falls in markets in Hong Kong, Tokyo and Shanghai.
Company news in Britain today will likely be overshadowed by the Chinese reaction, but not for water company United Utilities (LON:UU.).
It issues a trading update with the attention likely to be firmly centred on the cost of the recent cryptosporidium outbreak in Lancashire that has disrupted water supplies for weeks.
IN THE PAPERS
China’s latest economic concerns dominate the business headlines.
Panic swept through markets yesterday amid renewed fears that a slowdown in China could rock global growth, reports the Times.
Commodity prices collapsed as investors speculated that demand was drying up in the world’s second-largest economy.
The Telegraph gloomily reports analysts suggest another “crash” in global markets is possible as almost £44bn was wiped off Britain’s leading companies dragging the Footsie down to just 37 points shy of where it closed on 24 August.
Meanwhile the Volkswagen scandal continues to escalate with the Times suggesting hundreds of thousands of Volkswagen drivers in Britain face a mass recall of their vehicles after the scandal engulfing the carmaker spread around the world.
The German company admitted that 11 million of its cars worldwide were affected by a scam in which it deliberately cheated in testing of its diesel models for toxic emissions.
The Guardian focuses on Martin Winterkorn, the German carmaker’s chief executive, who apologised but remained in his job despite its shares slumping and government calls for a European commission inquiry,
Elsewhere, the Mail reports Sainsbury's has again outperformed its ‘Big Four’ supermarket rivals, industry data for the last three months showed today, while the march of German discounters Aldi and Lidl has continued.
Market research firm Kantar Worldpanel said Sainsbury's sales grew 0.9% in the 12 weeks to September 13, while sales at Tesco, Asda and William Morrison all fell.