- Aberdeen, Babcock, BHP Billiton and GKN provide a lift
- Insurers gain as Osborne calls for inquiry into leak
- UK PMI falls to eight-month low
techMARK 2,783.94 +0.70%
FTSE 100 6,652.61 +0.82%
FTSE 250 16,407.56 +0.82%
Stocks rose sharply on Tuesday as investors chose to look through what at first glance might have appeared to be slightly weaker than forecast global manufacturing data.
As Barclays Research put it to clients in an afternoon note "despite the broad-based slowdown, manufacturing activity remains well in expansionary territory in many key manufacturers, including the US, euro area, UK, Japan and some emerging markets."
No less important, many market observers are convinced that policymakers in Beijing will, sooner or later, move to prop up growth.
Acting as a backdrop, markets were tracking gains made on Wall Street on Monday evening after Federal Reserve Chair Janet Yellen pledged continued "extraordinary support" for the US economy. She said there is "considerable slack" in the labour market and that the Fed would continue to support the recovery "for some time to come".
The FTSE 100 ended the day 0.82% higher at 6,653, slightly underperforming indices across Europe.
The UK manufacturing purchasing managers' index (PMI) fell from a revised 56.2 to an eight-month low of 55.3 in March, disappointing analysts who had expected a figure closer to 56.7.
Analyst Armela Mancellari from Barclays Research pointed out that despite the growth slowdown, the PMI was still above the long-term average of 51.4. "However, this outcome supports our view that growth will be somewhat slower this year after the strong rebound experienced since the second quarter of 2013," she said.
For its part, the Bank of England's Financial Policy Committee warned that the eventual shift in the central bank's policy stance "could pose challenges in some sectors of the financial markets, particularly if global monetary policy stances were to adjust more abruptly than expected".
Aberdeen, Babcock and Legal&General gain
Asset manager Aberdeen surged this morning after saying that net outflows were just £0.2bn in March, compared with £3.9bn over the first two months of the year, helped by "encouraging inflows to emerging market debt, high yield bonds and property".
Sports Direct rose sharply after Liberum Capital said that it could expand its "limited scale" in many of the 19 European markets in which it already operates. Analyst Sanjay Vidyarthi said that organic growth alone is not viable, but identified "potential [acquisition] targets which equate to over 1,000 stores across Europe and around €2bn of sales".
Miner BHP Billiton responded to market speculation about a potential de-merger of non-core operations, saying that a "simplification of our portfolio is a priority". Shares rose after the company did not dismiss recent reports that it is considering a $20bn spin-off of its less-profitable assets of aluminium, manganese, thermal coal and nickel.
Prudential and Legal&General clambered up the leaderboard after George Osborne said he was "profoundly concerned" about the behaviour of the City regulator, the Financial Conduct Authority (FCA), after news of a review into the insurance sector was leaked. The Chancellor called for an inquiry.
Babcock rose after it was named preferred bidder on a 21-year contract with the London Fire Brigade. Panmure Gordon upgraded the stock to 'buy' on the back of last week's acquisition of helicopter services provider Avincis and yesterday's announcement of a potential nuclear decommissioning project.
Weir, the mining, oil and gas engineer, recovered towards the end of the trading session. Early in the day the company confirmed media speculation that it has made an indicative all-share merger proposal to Finnish rival Metso. No financial details were given but press reports suggest that it could pay £4bn for its rival.
Analysts at Canaccord Genuity said that the deal would need a "substantial equity element".
Supermarket stocks were among the fallers with Tesco in the red after Espirito Santoretained a 'sell' rating, saying that operationally the group had "not addressed its core offer on quality or pricing architecture". These "ongoing concerns will be reflected at the full-year results on April 16th", it said.
FTSE 100 - Risers
Aberdeen Asset Management (ADN) 416.50p +6.71%
ARM Holdings (ARM) 1,047.00p +4.91%
Sports Direct International (SPD) 892.50p +4.75%
Prudential (PRU) 1,317.00p +3.82%
Legal & General Group (LGEN) 211.70p +3.42%
easyJet (EZJ) 1,773.00p +3.38%
Aviva (AV.) 492.10p +3.17%
Babcock International Group (BAB) 1,387.00p +2.97%
CRH (CRH) 1,721.00p +2.75%
Ashtead Group (AHT) 975.50p +2.58%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 309.50p -2.09%
Pearson (PSON) 1,044.00p -1.79%
Morrison (Wm) Supermarkets (MRW) 210.80p -1.03%
Mondi (MNDI) 1,041.00p -0.76%
Weir Group (WEIR) 2,518.00p -0.71%
Tesco (TSCO) 293.40p -0.68%
Hargreaves Lansdown (HL.) 1,450.00p -0.55%
Diageo (DGE) 1,851.50p -0.51%
Burberry Group (BRBY) 1,388.00p -0.50%
Intertek Group (ITRK) 3,059.00p -0.42%
FTSE 250 - Risers
AL Noor Hospitals Group (ANH) 1,165.00p +8.47%
Heritage Oil (HOIL) 254.00p +6.95%
Intermediate Capital Group (ICP) 435.20p +5.20%
Bank of Georgia Holdings (BGEO) 2,610.00p +4.69%
Amec (AMEC) 1,171.00p +4.37%
Go-Ahead Group (GOG) 1,943.00p +4.29%
Halfords Group (HFD) 481.40p +4.24%
Rathbone Brothers (RAT) 1,890.00p +4.19%
Phoenix Group Holdings (DI) (PHNX) 684.50p +3.79%
Synergy Health (SYR) 1,430.00p +3.62%
FTSE 250 - Fallers
FirstGroup (FGP) 139.00p -4.73%
Xaar (XAR) 899.00p -4.16%
IP Group (IPO) 201.00p -3.27%
Senior (SNR) 300.00p -2.44%
Betfair Group (BET) 1,080.00p -2.35%
Jardine Lloyd Thompson Group (JLT) 1,042.00p -2.07%
Restaurant Group (RTN) 700.00p -1.82%
Provident Financial (PFG) 1,950.00p -1.66%
Tate & Lyle (TATE) 657.00p -1.57%
EnQuest (ENQ) 122.10p -1.53%