Better-than-expected trade data from China gave stocks a boost on Friday morning, as sentiment picked up from the day before when concerns over Europe sparked a sell-off on equity markets.
Both imports and exports in China jumped year-on-year in January, resulting in a higher-than-forecast trade surplus. Imports surged 28.8% on last year while exports rose 25%, beating the consensus estimates for increases of 23.5% and 17.5%, respectively. The trade surplus fell by less than expected from $31.6bn to $29.2bn, above the $26.6bn forecast.
Market analyst Craig Erlam from Alpari said: "I have so far been pessimistic about Chinese economic growth this year, with its two largest export markets facing strong headwinds and domestic demand being relatively low. However this data is very encouraging, especially when you also take into consideration the rise in imports which suggests domestic demand is also picking up."
Traders will now be looking ahead to US trade data out from the Commerce Department before the opening bell on Wall Street. The consensus estimate is for a deficit of $46.0bn in December, down from $48.7bn previously.
Over in the UK, construction output grew by 0.9% quarter-on-quarter in the last three months of 2012, according to the latest data from the Office for National Statistics (ONS), well above the 0.3% preliminary estimate included in the latest GDP figures.
Meanwhile, in other news, the European Union will push for a free trade pact with the United States, according to a draft document, something that has been decades in the making.
Markets across Europe suffered steep falls on Thursday - London's FTSE 100 dropped 1.06% - after European Central Bank (ECB) President Mario Draghi said that the recent rise in the euro could post a threat to the inflation outlook and hamper the recovery across the continent. He also claimed that the recovery across the region would not start until later in the year.
FTSE 100: Aggreko provides a spark
Temporary power and temperature controls firm Aggreko was higher this morning after HSBC upgraded the stock to 'neutral'. There was also some 'market chatter' speculating that Aggreko could be a bid target for ABB, according to Killik Capital.
Engineering group Weir was also on the up after UBS raised its target price from 2,000p to 2,300p and reiterated its 'buy' rating on the stock. The broker cited positive read-across from recent results from sector peers Metso and Outotec.
In contrast, Imperial Tobacco was a heavy faller after Investec downgraded the stock from 'buy' to 'hold', saying: "there is support from the valuation and the prospect of a takeout. But we don't think the latter is imminent enough and while IMT looks 'cheap', it doesn't look that cheap in the current Darwinian climate."
Miners were generally performing well today on the back of the upbeat data from China. Meanwhile, Rio Tinto and ENRC were being helped higher by comments from Credit Suisse, which labelled them as its 'top picks' in the mining sector ahead of earnings season.
FTSE 250: bwin.party rockets on licence hopes
Online gaming firm bwin.party jumped by as much as a fifth this morning on speculation that it could receive a licence to operate in New Jersey. "Now is the time for the state to move forward, leading the way for the nation, by becoming one of the first states to permit internet gaming," New Jersey's Governor Chris Christie was quoted as saying.
Office provider Workspace was wanted after saying that demand for space remains strong with an increase in like-for-like rent roll in the quarter and the year to date as it continues with its programme of refurbishment and redevelopment.
Insurer Catlin was firmly lower despite raising its dividend after reporting that annual profit before tax surged from $71m to $339m.
FTSE 100 - Risers
Old Mutual (OML) 191.60p +3.07%
Aggreko (AGK) 1,590.00p +2.12%
Land Securities Group (LAND) 815.50p +2.07%
International Consolidated Airlines Group SA (CDI) (IAG) 215.50p +2.04%
GKN (GKN) 250.80p +1.99%
Weir Group (WEIR) 2,117.00p +1.88%
Experian (EXPN) 1,103.00p +1.85%
Vodafone Group (VOD) 174.90p +1.77%
Intertek Group (ITRK) 3,226.00p +1.70%
Anglo American (AAL) 1,969.50p +1.68%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 6,040.00p -1.31%
Imperial Tobacco Group (IMT) 2,319.00p -1.19%
Severn Trent (SVT) 1,601.00p -1.05%
Schroders (SDR) 1,985.00p -0.70%
Kingfisher (KGF) 277.30p -0.61%
ARM Holdings (ARM) 919.00p -0.59%
BP (BP.) 454.15p -0.58%
G4S (GFS) 278.20p -0.57%
Smiths Group (SMIN) 1,219.00p -0.49%
AstraZeneca (AZN) 3,007.00p -0.48%
FTSE 250 - Risers
Bwin.party Digital Entertainment (BPTY) 139.90p +19.88%
Tullett Prebon (TLPR) 282.70p +5.21%
Workspace Group (WKP) 332.50p +4.89%
Playtech Ltd. (PTEC) 511.00p +4.35%
Betfair Group (BET) 706.50p +3.97%
Beazley (BEZ) 204.00p +2.51%
Dixons Retail (DXNS) 26.96p +2.12%
BH Global Ltd. USD Shares (BHGU) 11.6 +2.11%
Bumi (BUMI) 362.40p +2.11%
Bankers Inv Trust (BNKR) 498.10p +2.07%
FTSE 250 - Fallers
F&C Asset Management (FCAM) 104.20p -3.96%
Ferrexpo (FXPO) 259.10p -2.89%
Catlin Group Ltd. (CGL) 525.00p -2.51%
Lonmin (LMI) 370.00p -1.83%
Big Yellow Group (BYG) 362.40p -1.74%
Wetherspoon (J.D.) (JDW) 510.00p -1.73%
Menzies(John) (MNZS) 737.00p -1.73%
Smith (DS) (SMDS) 229.30p -1.59%
Dialight (DIA) 1,102.00p -1.43%
Afren (AFR) 150.20p -1.25%