- Investors focus on crisis talks in Berlin
- Carney says rate hike may come before wage growth
- UK asking prices drop by record 2.9% in August
- Bovis Homes impresses with 166% increase in H1 profit
techMARK 2,779.40 +0.86%
FTSE 100 6,733.96 +0.67%
FTSE 250 15,763.23 +0.61%
A reduction in geopolitical risk and hopes of progress in the Ukraine crisis sparked a positive start on UK stock markets on Monday.
Equities had pared gains sharply late on Friday on reports that Ukraine's military had shot down Russian armoured vehicles that had crossed the border.
However, crisis talks between Ukrainian Foreign Minister Pavlo Klimkin and his Russian counterpart Sergei Lavrov in Berlin were helping to lift sentiment on the markets on Monday "as investors cheer the efforts being made to ease tensions", according to market analyst Craig Erlam from Alpari UK.
He said: "The fact that both sides are showing a willingness to find a diplomatic solution to the crisis is a positive development, not just for Ukraine and Russia, but also Europe where the crisis has taken its toll on the economy."
The FTSE 100 was up 0.7% at 6,734 by midday. It has not closed above this level since 30 July.
Developments in Iraq were also being watched on reports that Islamic State (IS) militants have been forced out of Mosul dam by Kurdish fighters and Iraqi counter-terrorism forces.
UK rates, house prices
Comments from Bank of England (BoE) Governor Mark Carney were also in focus after he said that the central bank may not wait for wages to grow before lifting interest rates.
In an interview with the Sunday Times, Carney said that policymakers "have to have the confidence that real wages are going to be growing sustainably [before tightening policy]". However, he added: "We don't have to wait for the fact of that turn to do so."
As such, minutes from the latest meeting of the BoE's Monetary Policy Committee due out on Wednesday will be closely watched by the market.
In other UK news, Rightmove data showed a record 2.9% month-on-month drop in asking prices across the UK in August to £262,401 as the traditional summer lull dampened demand. The London market was particularly in focus as asking prices dropped 5.9% from July to £552,783.
Bovis jumps, supermarkets fall
Bovis Homes was a high riser after seeing profits rocket 166% in the first half with operating margins nearly five percentage points higher than last year, prompting the housebuilder to hike its interim dividend by 200%.
Estate agent chain Foxtons, which has performed well over recent sessions, was extending gains on Monday despite concerns over falling house prices and rising interest rates.
Supermarket giants Tesco and Wm Morrison were among the worst performers. In a research report, Shore Capital said it sees a "reasonably high probability" that Tesco will cut its dividend by 25-50%, while the outlook for Morrisons' payout remains uncertain.
Mining group Rio Tinto edged higher after saying it will decide on the future of its majority stake in a long-dormant copper mine in Papua New Guinea. BHP Billiton also continuing to rise after saying on Friday it is considering a demerger of non-core assets.
Retailers Debenhams and Ted Baker were out of favour after data from the British Retail Consortium and Springboard showed that footfall across UK stores fell 0.6% in July.
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 1,110.00p +2.78%
ARM Holdings (ARM) 929.50p +2.48%
Pearson (PSON) 1,142.00p +1.96%
Aggreko (AGK) 1,743.00p +1.93%
Sage Group (SGE) 399.30p +1.81%
Intertek Group (ITRK) 2,854.00p +1.64%
International Consolidated Airlines Group SA (CDI) (IAG) 337.90p +1.59%
easyJet (EZJ) 1,309.00p +1.55%
GlaxoSmithKline (GSK) 1,412.50p +1.47%
Johnson Matthey (JMAT) 3,135.00p +1.46%
FTSE 100 - Fallers
Tesco (TSCO) 246.60p -0.56%
St James's Place (STJ) 734.00p -0.41%
Royal Mail (RMG) 434.10p -0.34%
Legal & General Group (LGEN) 237.70p -0.25%
Land Securities Group (LAND) 1,096.00p -0.18%
HSBC Holdings (HSBA) 642.90p -0.09%
Reckitt Benckiser Group (RB.) 5,285.00p -0.09%
RSA Insurance Group (RSA) 439.20p -0.05%
Lloyds Banking Group (LLOY) 73.56p -0.04%
FTSE 250 - Risers
Bovis Homes Group (BVS) 846.00p +5.55%
Foxtons Group (FOXT) 283.90p +4.84%
Vedanta Resources (VED) 1,044.00p +3.16%
Ocado Group (OCDO) 346.30p +3.16%
Imagination Technologies Group (IMG) 191.60p +3.12%
Just Retirement Group (JRG) 147.20p +2.94%
JD Sports Fashion (JD.) 405.00p +2.79%
Regus (RGU) 182.70p +2.58%
Balfour Beatty (BBY) 246.00p +2.54%
Redrow (RDW) 260.40p +2.52%
FTSE 250 - Fallers
Centamin (DI) (CEY) 64.40p -3.16%
Debenhams (DEB) 63.30p -1.94%
Rank Group (RNK) 167.00p -1.76%
Perform Group (PER) 210.60p -1.63%
Ted Baker (TED) 1,779.00p -1.39%
Exova Group (EXO) 231.80p -1.36%
Cineworld Group (CINE) 327.10p -1.33%
PayPoint (PAY) 1,066.00p -1.30%
Computacenter (CCC) 617.50p -1.28%
Fidessa Group (FDSA) 2,281.00p -1.26%