(Alliance News) -Â The FTSE 100 remained in the green at midday on Thursday, with suppliers to industry among the gainers after some better-than-forecast Chinese export data.
This was helping to offset a fall for BT after the telecommunications firm suspended and rebased its dividend.
Meanwhile, the pound eased off morning highs but remained firm after the Bank of England stood pat on rates and its quantitative easing programme while warning the UK economy could shrink 14% this year.
The FTSE 100 index was up 39.40 points, or 0.7%, at 5,893.16 Thursday midday. The mid-cap FTSE 250 index was up 213.17 points, or 1.3%, at 16,195.64. The AIM All-Share index was up 0.8% at 813.91.
The Cboe UK 100 index was up 0.7% at 9,971.21. The Cboe 250 was up 1.2% at 13,874.19 and the Cboe Small Companies up 0.4% at 8,934.52.
"Better-than-expected data from China took the markets by surprise and helped to stabilise earlier declines in parts of Asia and also gave support to the FTSE 100. Exports from China rose 3.5% in April year-on-year versus expectations for a sharp decline, thus leading investors to speculate that the country could quickly recover from the pandemic," said Russ Mould, investment director at AJ Bell.
"Mining and oil shares rallied on the FTSE as investors bet that commodities demand could soon improve as China gets back to work," Mould added. "Anglo American, Royal Dutch Shell, BHP and Rio Tinto were among the top risers on the UK market."
Anglo American was up 3.2%. Shell 'A' and 'B' shares were up 2.9% and 3.1% respectively. BHP was up 2.6% and Rio Tinto up 2.1%.
China's exports posted surprise growth of 3.5% in April in spite of a hit to external demand during the coronavirus pandemic, official figures showed. But imports fell 14% from a year ago, a steeper drop than last month, according to the Customs Administration.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were both up 0.9% in early afternoon trade.
Wall Street is on course for a strong start on Thursday. The Dow Jones is pointed up 1.3%, the S&P 500 up 1.4% and the Nasdaq Composite up 1.5%.
The pound rose against the dollar in the morning after the Bank of England kept interest rates on hold and maintained its quantitative easing programme.
The BoE maintained the Bank Rate at its record low 0.1% in an unanimous vote, while the MPC voted 7-2 to continue with its GBP200 billion bond buying programme, to take the total stock of these purchases to GBP645 billion.
Two policy makers preferred to increase the target for the stock of asset purchases by an additional GBP100 billion at this meeting, the BoE said.
"Until today sterling had been on a losing streak this week in the face of multiple headwinds, including bleak economic prospects and growing unease regarding the way the coronavirus crisis has been handled by the government. It therefore wasn't a foregone conclusion that the central bank would be keeping its policies on hold, but the fact it did saw investors, who were braced for a more dovish stance, react with relief and back the pound," said Ricardo Evangelista, senior analyst at ActivTrades.
Looking to the UK economy, the BoE said the spread of Covid-19 and the measures to contain it are having a "significant impact". Both in the UK and around the world, activity has fallen sharply since the beginning of the year and unemployment has risen.
An "illustrative scenario" for the UK's economic outlook models a "very sharp fall" in UK GDP in the first half of 2020. Under this model, UK GDP falls 14% in 2020 but picks up in 2021 to grow 15%, before settling back to grow 3% in 2022.
The unemployment rate is expected to rise to 9% in the second quarter - which would be more than double the 4.0% rate reported by the Office for National Statistics for the three months to February, and the highest rate since 1994.
Sterling was quoted at USD1.2379 Thursday midday, up from USD1.2349 at the London equities close on Wednesday. The pound had surged above the USD1.24 mark earlier in the session but quickly settled back.
The euro traded at USD1.0794 on Thursday, flat on USD1.0799 late Wednesday. Against the yen, the dollar was quoted at JPY106.48, higher versus JPY106.05.
Gold was priced at USD1,693.59 an ounce early Thursday, up from USD1,685.00 on Wednesday. Brent oil climbed to USD31.58 from USD29.41.
Outside of miners and oil, RSA Insurance was one of London's top performers on Thursday, up 5.9%. The insurer said the first quarter of 2020 was "strong", with the insurance market conditions "largely unchanged".
Net written premiums were down 1% year-on-year in the quarter, excluding exits, but down 2% including exits. RSA said the slip in the three months to March 31 was in line with internal expectations.
The insurer said its business operating profit in the first quarter rose by "double digit percentages", with an improved combined ratio and slightly lower investment income.
Phoenix Group rose 4.4% as it continues to target cash generation between GBP800 million and GBP900 million in 2020.
The FTSE 100-listed life insurer and pensions consolidator also committed to paying its 2019 final dividend of 23.4 pence.
In the first quarter, Phoenix saw GBP100 million of new business, with GBP58 million from UK Open and Europe businesses and GBP42 million from bulk purchase annuities.
Remaining at the bottom of the FTSE 100 was BT, down 7.2% after the telecommunications firm suspended its dividend until financial 2022 - resuming payments then at a lower rate - and said profit declined in its most recent year, partly as a result of regulation and partly from legacy product decline.
BT reported a GBP2.35 billion pretax profit for its year ended March 31, down 12% from GBP2.67 billion the prior year as revenue fell 2.2% to GBP22.91 billion from GBP23.43 billion. BT said its revenue drop predominantly reflected "the impact of regulation, declines in legacy products, strategic reductions in low margin business and divestments".
The company has suspended its final financial 2020 dividend and all dividends for financial 2021 "to create capacity for value-enhancing investments and managing confidently through the Covid-19 crisis". It will resume payments in financial 2022 at a 7.7 pence per share annual rate.
For the 2019 financial year, BT paid out 15.40p per share.
Meanwhile, Liberty Global confirmed it has agreed to merge its Virgin Media unit with Telefonica's UK telecommunications unit O2 in a deal worth more than GBP31 billion.
Liberty and Telefonica each will own 50% of the joint-venture which is expected to be completed in 2021. The combination will produce a stronger rival to BT's EE mobile carrier, as well as to Vodafone, down 0.2%.
International Consolidated Airlines slipped 4.2% as it reported a quarterly loss, in line with guidance given last week.
The British Airways-owner also said Chief Executive Officer Willie Walsh will stay a little longer.
Walsh will remain at the helm until September 24, not departing at the end of June as initially planned. His departure was announced back in January with boss IAG-owned Iberia Luis Gallego replacing him.
IAG confirmed it endured a difficult fourth quarter, swinging to an operating loss of EUR1.86 billion in the three months to March 31, from a EUR135 million profit a the year prior. It affirmed on Thursday that its first quarter operating loss before exceptional items was EUR535 million, again a swing from last year's EUR135 million profit.
The FTSE 100 airline group said it is planning for a "meaningful" return to service in July, but warned passenger demand may only return to pre-pandemic levels in 2023. It added it will defer the delivery of 68 aircraft.
Jet engine maker Rolls-Royce also was 4.2% lower as it warned the Covid-19 pandemic has caused "significant disruption" to the aerospace industry but it will deliver up to GBP1.0 billion in cash savings in 2020.
Civil Aerospace widebody engine flying hours were about 40% lower than prior expectations for the first four months of the year, Rolls-Royce said. This reflected a fall of 90% in April as airlines around the world have temporarily grounded large proportions of their fleets.
"As a group, we are prepared to endure a prolonged period of uncertainty. Due to the unprecedented reduction in air traffic caused by Covid-19, we are anticipating a significant net cash outflow during the second quarter and it remains too early to guide on the likely outcome for the full year," Rolls-Royce said.
Among London mid-caps, TUI fell 10% after Morgan Stanley cut the travel operator to Underweight from Equal Weight.
By Lucy Heming;Â lucyheming@alliancenews.com
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