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London close: Stocks hit fresh highs on news of China-US trade framework
London's top-flight index hit a new record on Monday, boosted by a weaker pound as the dollar rallied on the back of an easing of tensions between the US and China, which also helped to lift broader market sentiment.
By the closing bell, the FTSE 100 had gained 1.03% or 80.38 points to finish at 7,859.17, breaking through the 7,800 mark for the first time, as the pound fell 0.39% versus the dollar to 1.3416 and 0.37% against the euro to 1.1400.
A weaker pound tends to lift the blue chip index as around 70% of its constituents derive most of their earnings from overseas.
Investors breathed a sigh of relief after US Treasury Secretary Steve Mnuchin said over the weekend that the US would hold off from imposing tariffs on China, which had originally sparked fears of a trade war between the two. Mnuchin said that a trade war was "on hold" as both countries agree to work on a wider trade agreement.
The dollar was one of the biggest benefactors of the decline in tensions between the US and China, with the prospect of higher demand for US goods meaning increased demand for the greenback, said Joshua Mahony, market analyst at IG.
"While this is no doubt a good news story for markets, the question over whether there is a specific amount of trade required to fulfil the deal remains relevant. From a headline point of view this looks like a big win for Trump, yet only time will tell whether this whole debacle makes any tangible difference to their trade relationship," he said.
"With GBPUSD hitting a four-month low in early trade, it comes as no surprise that we are seeing the FTSE 100 celebrate by punching into fresh all-time highs. The closure of German, French and Swiss markets means that much of the focus is on the UK to lead the way, while a bank holiday in Canada also means lower volumes throughout the US session."
Nevertheless, and in a stark reminder of the multiple sources of uncertainty that investors still needed to navigate, on Monday afternoon US Secretary of State, Mike Pompeo vowed the strongest sanctions in history against Tehran.
Pompeo demanded that Iran stop developing ballistic missile technology and cease supporting militant and terrorist groups across the Middle East and beyond.
In corporate news, pharma giant AstraZeneca rallied after receiving US regulatory approval for its Lokelma treatment for hyperkalaemia, an increased level of potassium levels in the blood suffered by many people with chronic kidney disease and heart disease. It also announced that it had submitted a new drug application in Japan for a diabetes treatment, following recent approval in Europe.
RBS was in the black following reports that the state-owned bank is considering restarting dividends on a scale that would it make it one of Britain's most generous payers to shareholders and accelerate the government's sale of its stake.
Rival Barclays advanced after the Crown Court dismissed fraud charges brought by the Serious Fraud Office against the bank over its emergency fundraising deal with Qatar at the height of the financial crisis.
Budget airline Ryanair flew higher as it posted a 10% jump in full-year pre-tax profit but said its outlook for FY19 was on the "pessimistic side of cautious" due to rising costs and flat fare growth as it cut its full-year guidance.
NewRiver shares were flat after confirming that it has entered a period of exclusivity with Hawthorn Leisure Holdings and its major shareholder regarding a potential acquisition of the business on Monday, following press comment.
Shares in Bank of Georgia fell down after posting an 18.8% increase in first-quarter profit.
In broker note action, G4S was lifted by an initiation at 'buy' at Kepler Cheuvreux, while Tesco was up as Citi resumed its coverage at 'buy' and Ocado advanced after an upgrade to 'add' at AlphaValue.
Rotork was knocked lower by a downgrade to 'underperform' at Credit Suisse, while IWG was managing to hold its head above water despite a downgrade to 'hold' at Stifel.
Market Movers
FTSE 100 (UKX) 7,859.17 1.03%
FTSE 250 (MCX) 21,137.66 0.70%
techMARK (TASX) 3,533.80 0.83%
FTSE 100 - Risers
3i Group (III) 1,026.50p 3.79%
Burberry Group (BRBY) 2,000.00p 3.52%
Sainsbury (J) (SBRY) 316.20p 3.50%
AstraZeneca (AZN) 5,417.00p 3.36%
Marks & Spencer Group (MKS) 301.20p 2.98%
Anglo American (AAL) 1,910.40p 2.71%
WPP (WPP) 1,360.50p 2.68%
Ashtead Group (AHT) 2,351.00p 2.35%
Paddy Power Betfair (PPB) 8,790.00p 2.21%
Melrose Industries (MRO) 241.90p 2.15%
FTSE 100 - Fallers
Evraz (EVR) 487.70p -3.68%
Micro Focus International (MCRO) 1,342.00p -1.54%
Randgold Resources Ltd. (RRS) 5,738.00p -1.31%
British American Tobacco (BATS) 3,764.50p -0.93%
Fresnillo (FRES) 1,273.00p -0.35%
Mediclinic International (MDC) 666.20p -0.06%
BT Group (BT.A) 203.15p -0.05%
Reckitt Benckiser Group (RB.) 5,948.00p -0.03%
British Land Company (BLND) 692.80p -0.03%
Standard Life Aberdeen (SLA) 370.60p 0.19%
FTSE 250 - Risers
Ocado Group (OCDO) 873.80p 9.18%
Crest Nicholson Holdings (CRST) 443.60p 5.22%
Ascential (ASCL) 424.40p 3.56%
Sirius Minerals (SXX) 34.06p 3.40%
Computacenter (CCC) 1,350.00p 3.37%
Herald Investment Trust (HRI) 1,330.00p 3.12%
Cranswick (CWK) 3,154.00p 3.06%
Provident Financial (PFG) 655.20p 2.54%
Indivior (INDV) 469.60p 2.47%
Just Group (JUST) 150.60p 2.38%
FTSE 250 - Fallers
Rank Group (RNK) 156.38p -4.08%
Sophos Group (SOPH) 575.00p -3.60%
Thomas Cook Group (TCG) 125.00p -2.95%
Babcock International Group (BAB) 750.00p -2.90%
Telecom Plus (TEP) 1,036.00p -2.62%
Capita (CPI) 136.65p -2.46%
McCarthy & Stone (MCS) 131.40p -2.30%
Daejan Holdings (DJAN) 6,000.00p -2.12%
Petrofac Ltd. (PFC) 589.00p -2.00%
Softcat (SCT) 659.00p -1.64%