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LONDON (Alliance News) - Stock prices in London were higher on Monday at midday, after initial fears of political and economic instability in Europe following the 'No' vote in the Italian referendum on constitutional reforms appeared to diminish.

The FTSE 100 index was up 0.4%, or 26.22 points at 6,756.94. The FTSE 250 was 0.1% higher at 17,450.40, and the AIM All-Share was up 0.1% at 815.13.

The BATS UK 100 was up 0.2% at 11,420.91, the BATS 250 up 0.1% at 15,900.75, and the BATS Small Companies up 0.5% at 10,203.26 points.

The Italian referendum was essentially about proposals to concentrate power in the government's hands, by curtailing veto rights of the upper chamber of parliament and of regional administrations. A 'No' victory, backed by all opposition parties, was seen as another anti-establishment choice by Western voters, after the UK's Brexit decision and Donald Trump's victory in the US presidential elections.

Italian Prime Minister Matteo Renzi was due to tender his resignation on Monday after the referendum, seen by many as a plebiscite on his popularity. Just over 59% of Italians voted against Renzi's proposed reforms and less than 41% in favour, the Interior Ministry said, with all votes counted. Turnout was relatively high at 65.5%.

"We have seen a very similar market reaction to this referendum result as that seen for both the US election and UK referendum, with initial fears brushed aside by those seeking to push the stock markets higher," said IG analyst Joshua Mahony.

"This time there is no hope of a substantial stimulus package to prop up stocks, but instead the more predictable nature of the result means that much of the weakness had already been factored into stock and euro valuations," the analyst noted.

The euro was quoted at USD1.0716 on Monday midday, recovering from earlier losses, higher than the USD1.0676 at the London equities close on Friday.

European indices had opened slightly lower but almost immediately reversed higher. The CAC 40 index in Paris was up 1.1% at midday, and the DAX 30 in Frankfurt was up 1.5%. In Milan, the FTSE MIB index was recovered opening losses but was still down 0.6%.

"This morning's recovery is a clear sign that market perception is that despite causing uncertainty, this result is unlikely to spark a major crisis for the banks," said IG's Mahony.

Before the referendum was held, analysts were saying that a recapitalisation plan at Italy's third largest bank, troubled Monte dei Paschi di Siena, could fail if a 'No' vote was to win the referendum.

A raft of Markit Purchasing Managers' Index readings was overshadowed by the news of the Italian referendum on Monday.

Markit said the final eurozone composite PMI rose by less than initially estimated to 53.9 points in November from 53.3 in October. The flash score was 54.1. The services reading climbed to 53.8 from 52.8 in October. The reading also was below the flash estimate of 54.1.

Germany's final composite PMI slipped marginally to 55.0 points from 55.1 in October but remained above the flash reading of 54.9. The final services PMI came in at a six-month low of 55.1 versus 54.2 in October. The flash score was 55.

The French private sector logged its weakest growth in four months. The composite PMI slumped to 51.4 points from 51.6 in October. This was well below the initial score of 52.3. The services PMI climbed to 51.6 from 51.4 in October. However, it was below the flash estimate of 52.6.

In the UK, the final services sector PMI rose to 55.2 in November from 54.5 in October.

"The further upturn in the vast services sector shows that the pace of UK economic growth remains resiliently robust in the fourth quarter, despite ongoing uncertainty caused by Brexit," said Chris Williamson, economist at IHS Markit.

The pound was quoted at USD1.2722 at midday, higher than USD1.2675 at the London equities close on Friday.

In the afternoon, Markit services and composite PMI readings for the US are at 1445 GMT, while the ISM non-manufacturing PMI is at 1500 GMT.

Stocks in New York were called for a higher open, with both the Dow Industrials and the S&P 500 seen up 0.4% and the Nasdaq 100 pointed up 0.5%.

On the London Stock Exchange, Burberry Group was up 2.0%. The fashion house has rejected several takeover approaches from larger US peer Coach, the Financial Times reported. The FT, citing people briefed on the matter, said talks are no longer active between the pair, and this is not expected to change any time soon. Both Burberry and Coach declined to comment to the paper.

The proposals from Coach were informal and would have involved a cash-and-shares takeover of Burberry, the FT said. It is unclear at what premium the offer was made or if Burberry ever engaged in any serious talks with the US suitor, the newspaper said.

Miners were also on the rise, with BHP Billiton up 1.7% and Rio Tinto up 1.3% after Citigroup lifted its recommendations on the two stocks. BHP was double-upgraded to Buy from Sell and Rio to Neutral from Sell. Antofagasta was up 2.7% after Citi lifted its price target.

Life insurer Prudential was up 1.3%. The firm has kicked off a review of its pension liabilities business, which could lead to a sale of the annuities business and a possible break-up of the entire company, The Times reported.

The review is being led by Clare Bousfield, who joined Prudential in October as its UK division chief, the newspaper said.

Royal Bank of Scotland Group was up 0.9%. The state-backed lender said it has set aside GBP800.0 million to settle claims made against the bank by shareholder groups over its 2008 rights issue, which was conducted only months before the bank had to seek a bailout from the UK government at the height of the financial crisis.

RBS said it is willing to pay up to GBP800.0 million to settle claims made by three of the five shareholder groups that have taken action against the bank. RBS said this would represent around 77% of the claims made. The money is covered by existing provisions booked by the bank.

In the red were Randgold Resources and Fresnillo, - down 3.3% and 3.5%, respectively - as the gold miners tracked the precious metal's price lower. Gold was quoted at USD1,167.66 an ounce on Monday at midday, compared to USD1,174.20 an ounce at the London equities close on Friday. Peer Acacia Mining was the worst mid-cap performer, off 3.6%.

Rotork was up 2.7%, the best FTSE 250 performer, after the valve actuators maker was upgraded by HSBC to Hold from Reduce. Meanwhile, plastic piping systems manufacturer Polypipe Group was up 2.0%, benefiting from from an upgrade to Buy from Hold by Jefferies.

Grafton Group was down 3.3%. The builders' merchant was downgraded to Hold from Buy by Jefferies.

By Daniel Ruiz; danielruiz@alliancenews.com

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