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London close: Stocks push ahead as airlines lead gains

(Sharecast News) - UK stocks finished firmly in positive territory on Thursday despite a brief dip in afternoon trade, as falling oil prices and a return in risk appetite helped equity markets higher following the recent sell-off.

Following a temporary stint in the red, a late rally saw the FTSE 100 closed 0.4% higher at 7,877. This was the second straight gain for the index after big drop on Tuesday which sent it to a four-week low on the back of escalating tensions in the Middle East and fading hopes of rate cuts by the Federal Reserve.

Helping gains on Thursday was a continued decline in oil prices, though crude prices had bounced off their lows of the day by the close in London. Still, Brent was trading around the $87 mark, a three-week low, having dropped sharply from the $90 level earlier in the week as fears about an immediate retaliation in Israel following a missile and drone attack from Iran have eased slightly.

"Crude oil markets stepped off year-to-date highs as geopolitical risk premiums were eroded," said analysts at TD Securities. "The risk of stricter US sanctions-enforcement on Iranian oil is an additional non-military avenue that could additionally tighten supplies, but market participants expect limited action on this front given the US' recent stance."

Meanwhile, market participants continued to watch the International Monetary Fund and World Bank meetings in Washington, with a number of central bankers scheduled to make speeches during the day.

Over the past week, a number of officials in the US - including Fed chair Jerome Powell - have quashed hopes of imminent interest-rate cuts on the back of recent resilient economic data - particularly since inflation has been stronger than expected for the past three months.

"It feels as if we're in a transition stage between relentless bullishness to a more bearish feel to market sentiment," said David Morrison, senior market analyst at Trade Nation.

"Ever since the latest leg of the rally began last October, bad news has been shrugged off while good news has been disproportionately rewarded. It now feels as if the polarities are on the cusp of reversing. This has come as the prospect of imminent monetary stimulus in the form of a series of Fed rate cuts this year has been watered down substantially."

Market movers

Airline shares were in demand in London as oil prices continued to retreat, with IAG, Wizz Air and easyJet notable risers of the day. Budget airline easyJet was also gaining after reporting that its winter losses narrowed by more than £50m over the six months through March despite challenges like fuel cost inflation and Middle East tensions impacting results.

Financial stocks rose strongly, with Prudential, Barclays, Beazley and Standard Chartered among the best performers on the FTSE 100.

Shares in Hipgnosis Songs Fund rocketed by more than 30% after the music rights investor said it had agreed a $1.4bn takeover by US-based Concord Chorus, a music and theatrical rights firm. Hipgnosis Songs investors will get $1.16 a share in cash, a 32% premium based on current exchange rates from Wednesday's closing price.

Rentokil Initial was a standout faller, dropping nearly 8% after underwhelming investors with a 4.9% increase in first-quarter revenue. The pest control, cleaning and workwear company reported a "stabilising performance" in North America, but analysts expressed concerns about competition in the key region for the company.

Dunelm shares dropped 7% after the homewares retailer reported a slowdown in sales growth in its third quarter due to "volatile" trading conditions. The company said total sales in the three months to 30 March were up 3% year-on-year at £435m, compared with 4.5% growth seen in the first half.

Market Movers

FTSE 100 (UKX) 7,877.05 0.37% FTSE 250 (MCX) 19,443.36 0.53% techMARK (TASX) 4,389.45 0.05%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 169.80p 5.66% Prudential (PRU) 722.80p 4.42% Beazley (BEZ) 670.00p 2.84% Standard Chartered (STAN) 660.20p 2.64% easyJet (EZJ) 530.00p 2.28% Barclays (BARC) 183.98p 2.25% Severn Trent (SVT) 2,419.00p 2.15% Airtel Africa (AAF) 106.80p 2.10% Associated British Foods (ABF) 2,442.00p 2.01% Kingfisher (KGF) 248.20p 1.97%

FTSE 100 - Fallers

Rentokil Initial (RTO) 412.90p -7.61% Spirax-Sarco Engineering (SPX) 9,190.00p -2.75% BAE Systems (BA.) 1,287.00p -2.50% Experian (EXPN) 3,206.00p -2.29% Burberry Group (BRBY) 1,122.00p -2.09% Unite Group (UTG) 920.50p -1.92% Intermediate Capital Group (ICG) 2,014.00p -1.76% CRH (CDI) (CRH) 6,266.00p -1.57% Croda International (CRDA) 4,849.00p -1.18% Weir Group (WEIR) 1,990.00p -1.00%

FTSE 250 - Risers

Hipgnosis Songs Fund Limited NPV (SONG) 92.00p 30.50% Wizz Air Holdings (WIZZ) 2,118.00p 6.59% Wood Group (John) (WG.) 151.00p 5.45% Dr. Martens (DOCS) 70.05p 4.55% Spire Healthcare Group (SPI) 248.00p 3.98% PZ Cussons (PZC) 88.20p 3.89% Darktrace (DARK) 458.40p 3.78% Hochschild Mining (HOC) 151.00p 3.57% Plus500 Ltd (DI) (PLUS) 2,100.00p 3.55% IP Group (IPO) 47.50p 3.49%

FTSE 250 - Fallers

Dunelm Group (DNLM) 995.50p -7.31% Future (FUTR) 631.50p -4.39% Watches of Switzerland Group (WOSG) 336.00p -3.89% Vesuvius (VSVS) 457.50p -3.68% Quilter (QLT) 99.00p -3.41% Trustpilot Group (TRST) 187.60p -3.40% Bridgepoint Group (Reg S) (BPT) 230.00p -3.12% Twentyfour Income Fund Limited Ord Red (TFIF) 102.20p -2.85% Games Workshop Group (GAW) 9,655.00p -2.77% Discoverie Group (DSCV) 689.00p -2.55%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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