LONDON (Alliance News) - Stocks in London were higher at midday as investors welcomed political stability in Europe, while shares in
DS Smith gained as it agreed to acquire a Spanish rival. The FTSE 100 index was up 0.7%, or 55.40 points, at 7,757.17 at midday. The mid-cap FTSE 250 index was up 0.5%, or 96.15 points at 21,081.07. The AIM All-Share index was up 0.3% at 1,087.08.The Cboe UK 100 was up 0.5% at 13,163.11, the Cboe UK 250 was up 0.6% at 19,255.83, and the Cboe UK Small Companies was flat at 12,697.18."European equity markets are in positive territory as global sentiment has improved. The positive US non-farm payrolls report on Friday set the tone for a positive finish in Asia overnight, and that sentiment spilled over to Europe today. The new Italian government is likely to be confirmed later today, and this has steadied traders' nerves," said David Madden, market analyst at CMC Markets.On the London Stock Exchange, DS Smith was the best blue chip performer up 3.3% after the recycled packaging firm said it is set to acquire Spanish-listed packaging business Papeles y Cartones de Europa, funding the acquisition through a rights issue. The acquisition prices the Spanish company, also known as Europac, at EUR16.80 per share, valuing it at a total of EUR1.67 billion. For 2017, Europac reported revenue of EUR868 million and earnings before interest, tax, deprecation and amortisation of EUR158 million. To fund the acquisition, DS Smith plans to raise GBP1.0 billion through a rights issue to be launched this month, and a new debt facility of EUR740 million. The rights issue is fully underwritten by Citigroup, Goldman Sachs and JP Morgan and has not yet been priced. DS Smith also said it delivered a "strong" performance for the year to April 30, with continuing box volume growth. Conversely, rival packaging company
Smurfit Kappa was the worst blue chip performer down 5.3%. In the FTSE 250,
SIG was the best blue chip performer up 6.5% after Liberum double upgraded the building products distributor to Buy from Sell. At the other end of the midcap index,
Alfa Financial Software was the worst performer down 14% as Berenberg downgraded the stock to Hold from Buy in the wake of a profit warning. Shares in the asset finance software firm continued to decline after it said a major customer has delayed its implementation project on Friday afternoon. Alfa Financial said the delay will have a "significant" impact on its first and second half trading. As a result, the company revised its 2018 revenue guidance to between GBP71 and GBP75 million, with revenue for 2017 coming in at GBP87.8 million. The stock closed down 41% on Friday. "We believe this issue stems from an unresolved data issue in their customers' legacy systems which must be resolved before Alfa can progress," analysts at the German bank noted. Sterling was firm against the dollar quoted at USD1.3388 at midday, against USD1.3350 at the London equities close Friday, after upbeat UK construction PMI data.UK construction activity growth remained stable in May, survey data from IHS Markit and Chartered Institute of Procurement & Supply showed.The construction Purchasing Managers' Index held steady at 52.5 in May. A score above 50 indicates expansion. Economists had forecast the index to drop to 51.8.Some firms suggested that unusually good weather conditions had supported activity and enabled them to continue catching up after prior months' weather related disruptions."The construction sector has become particularly significant over recent months, with the UK suffering the weakest period of growth in five years in the first quarter, thanks to the underperformance of the construction sector in particular. While the first quarter may have seen the sector suffer thanks largely to the 'Beast from the East', we are seeing the sector stabilise, albeit at a somewhat underwhelming rate," said IG market analyst Joshua Mahony.Stock markets across the continent were higher as political worries in Italy and Spain eased.In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 30 in Frankfurt was up 0.3%.Socialist party leader Pedro Sanchez was sworn in as prime minister over the weekend by Spain's King Felipe VI. The 46-year-old took the oath of office in the morning hours at the Palace of Zarzuela on the outskirts of Madrid.Sanchez, the seventh prime minister of Spain since the end of the Franco dictatorship in 1975, is the first premier to come to power without a national vote for parliament.Instead, Sanchez ascended to Spain's top political post after putting up a no-confidence motion against former prime minister Mariano Rajoy, who lost the vote Friday.Meanwhile, Italy inaugurated its first-ever EU-critical coalition government on Friday, handing the reins to the anti-immigrant League party and the anti-establishment Five Star Movement following nearly three months of political gridlock and chaos.Giuseppe Conte - a law professor and political novice - was chosen by the League and the M5S to lead the populist coalition government. He and his cabinet were sworn in by President Sergio Mattarella in a ceremony at the presidential palace in Rome on Friday.Italy's blue chip FTSE MiB index was up 0.3% and Spain's large cap IBEX 35 was up 1.7%. The euro was higher against the dollar quoted at USD1.1729 at midday, against USD1.1672 at the European equities close Friday.Stocks in New York were set for a higher open ahead on Monday following positive US unemployment data on Friday. The Dow Jones Industrial Average was called up 1.1%, the S&P 500 was also pointed 1.6% higher and the Nasdaq Composite set to gain 0.9%.Data from the Labor Department on Friday showed that non-farm payroll employment surged up by 223,000 jobs in May after climbing by a downwardly revised 159,000 jobs in April. Economists had expected employment to increase by 188,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.In addition, investor sentiment was also boosted after US President Donald Trump revealed that his summit with North Korean leader Kim Jong Un is back on.Trump announced on Friday that he would meet with North Korean leader Kim Jong Un in Singapore on June 12 to discuss nuclear disarmament. Just eight days earlier, Trump abruptly withdrew from the meeting, citing Pyongyang's "open hostility".
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