London shares recovered their poise after Monday's China-inspired carnage, but Next (LON:NXT) disappointed on festive sales.
The FTSE 100 Index climbed 34 points to 6127 following yesterday's 150-point drop sparked by disappointing Chinese manufacturing data.
The Shanghai Composite closed slightly lower despite a cash injection of nearly US$20bn by the People's Bank of China (PBoC) to encourage more borrowing.
Back in the UK, construction activity rose in December from a seven-month low in November, but the overall rate of expansion was slightly weaker than the average since May 2013.
On the market, the first retailer to report in 2016, Next, failed to cheer the market after releasing lower Christmas sales figures.
Next kept its annual profit guidance range of between £810mln to £845mln. But it said its revised central forecast was now £817mln, which could go up or down by £7mln depending on January trading. Shares in Next fell 360p, or more than 5%, to 6830p.
Shore Capital said: "We note that the upper end of this revision falls below the prior market consensus of circa £829mln."
Elsewhere, industrial conveyor belt maker Renold (LON:RNO) jumped 3.25p to 59p after completing its acquisition of the business and trading assets of Aventics Tooth Chain, part of Germany's Aventics.
Oxford Biomedica (LON:OXB) ticked up 0.35p to 7p as it announced that one of its non-executive directors, Dan Soland, was stepping down to become the chief executive of another company.
Bango (LON:BGO) shares shot up 6% to 111p after the mobile payment specialist expanded its agreement with Microsoft to include Windows 10 devices.
MARKET PREVIEW
The UK's top-share index is set to claw back some of yesterday's heavy losses after China took action to stabilise its financial system.
Spread betting quotes indicate that after plunging 149 points yesterday, the FTSE 100 will open around 57 points higher at the outset on Tuesday.
Yesterday's shake-out was triggered by volatile trading in China after a very weak reading on a Chinese manufacturing index, and it was another nervous day today in Asia Pacific, despite the Chinese central bank, the People's Bank of China (PBoC) whacking in 130bn yuan, or close to US$20bn, into the system to encourage more borrowing.
The move steadied the ship for a while but heading towards the close the Shanghai Composite was still 2% down on the day.
Elsewhere in Asia, Japan's Nikkei 225 was off 0.45% and Hong Kong's Hang Seng was down 1.2%.
“The PBOC’s offer of 130bn yuan (almost $20bn) of reverse repurchase agreements appears to have eased liquidity concerns in Chinese money markets and offered some layer of comfort for equity investors. With rising capital outflows thanks to the weakening currency, tight liquidity has forced the PBOC to offer alternative funding,” said Jasper Lawler, a market analyst at spread betting firm CMC Markets.
“In the reverse repo [repurchase] the PBOC is selling government debt to eligible counter-parties with an agreement to repurchase those same securities in the future, and in doing so adds cash into the system. The PBOC also fixed the yuan stronger to the dollar on Tuesday in a sign that it may take its foot off the devaluation pedal having just taken the currency to four-and-a-half month lows,” Lawler added.
US markets last night followed the global trend and had one of the worst first trading days of the year in recent memory.
The S&P 500 made its worst start to the year in 15 years, shedding 1.5% at 2,013 while the Dow Jones Industrial Average declined 1.6% to 17,149. The tech-heavy Nasdaq was harder hit, shedding 2.1% at 4,903.
In the UK, just as Christmas is becoming a fond memory/nightmare (delete as appropriate), fashion firm Next (LON:NEXT) will be the first of many retailers this week to update on how sales went over the Christmas period.