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London midday: Stocks stay up as miners rally; Haleon slumps

(Sharecast News) - London stocks had maintained gains by midday on Wednesday, with miners on the front foot after China said it will cut the reserve requirement ratio for banks from next month. The FTSE 100 was up 0.4% at 7,518.95.

Sentiment got a boost after the governor of the People's Bank of China said the country plans to cut the amount of liquidity that banks are required to hold as reserves early next month as it looks to bolster the economy.

At a press conference in Beijing, Pan Gongsheng said the reserve ratio requirements for banks will be cut by 50 basis points from 5 February, providing 1 trillion yuan in long-term capital.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 got off to a strong start on Wednesday as US stocks continued to test new records with earnings season getting underway in earnest.

"Reported plans for a big intervention to help restore investor confidence in China helped lift shares with ties to emerging markets including insurer Prudential, banking outfit Standard Chartered and miners."

On home shores, a survey out earlier showed that activity in the services sector picked up in January, but the Red Sea crisis hit manufacturing supply chains.

The S&P Global flash composite purchasing managers' index - which measures activity in both sectors - rose to 52.5 in January from 52.1 the month before, hitting a seven-month high. Economists were expecting a reading of 52.2.

A reading above 50 signals expansion, while a reading below indicates contraction.

The flash services PMI business activity index printed at 53.8, up from 53.4 and an eight-month high.

However, the index for manufacturing ticked up to 47.3 in January from 46.2 a month earlier, but remained firmly in contraction territory.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "UK business activity growth accelerated for a third straight month in January, according to early PMI survey data, marking a promising start to the year. The survey data point to the economy growing at a quarterly rate of 0.2% after a flat fourth quarter, therefore skirting recession and showing signs of renewed momentum.

"Businesses have also become more optimistic about the year ahead, with confidence rebounding to its highest since last May. Business activity and confidence are being in part driven by hopes of faster economic growth in 2024, in turn linked to the prospect of falling inflation and commensurately lower interest rates."

Williamson said the surprising strength of growth in January may deter the Bank of England from cutting interest rates as soon as many are expecting, especially as supply disruptions in the Red Sea are reigniting inflation in the manufacturing sector.

"Supply delays have spiked higher as shipping is re-routed around the Cape of Good Hope, the longer journey times lifting factory costs at a time of still-elevated price pressures in the service sector," he said. "Inflation is therefore indicated to remain stubbornly higher in the 3-4% range in the near future."

In equity markets, heavily-weighted miners jumped on the China news, with Anglo American, Glencore, Antofagasta and Rio Tinto all up. Asia-focused Prudential and Standard Chartered also advanced.

Precious metals miners Endeavour, Fresnillo, Centamin and Hochschild shone.

Budget airline easyJet flew higher as it said it had taken a £40m hit from the Middle East conflict, but that it expects expected first-half losses to narrow and reported positive booking momentum for the summer.

The airline was forced to suspend flights to Israel and Jordan after the Hamas Islamic group attacked Israel last October, with demand also softening on its routes to Egypt.

Pre-tax losses for the three months to December 31 came in at £126m from £133m a year earlier. Revenues were up 16% to £1.1bn.

Diversified Energy recovered some ground, having tumbled on Tuesday after activist investor Snowcap Research said the company may not have enough funds to cover the costs of plugging its inactive wells and that a dividend cut was imminent.

IDS was up after Ofcom called for an overhaul of the UK's postal service, including potentially cutting Royal Mail deliveries to just three days a week.

On the downside, Haleon slumped as JPMorgan Cazenove said that having delivered strong volumes versus staples peers over the past two years, it expects the top line to disappoint as the tailwinds that boosted its over-the-counter divisions abate.

Asset manager Abrdn fell as it said it was embarking on a new cost-cutting initiative to save £150m by the end of 2025 and reported net outflows of over £12m in the second half.

Wetherspoons edged down even as the pub chain held annual guidance and reported a rise in first-half underlying sales.

Senior was knocked lower by a downgrade to 'equalweight' from 'overweight' at Barclays, while Greggs fell after an initiation at 'hold' by Numis, which said growth was "baked in".

Market Movers

FTSE 100 (UKX) 7,518.95 0.44% FTSE 250 (MCX) 19,158.42 0.87% techMARK (TASX) 4,358.74 0.48%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,450.00p 5.30% Fresnillo (FRES) 503.60p 4.72% Antofagasta (ANTO) 1,656.00p 3.69% Anglo American (AAL) 1,845.00p 3.10% Burberry Group (BRBY) 1,282.50p 3.05% International Consolidated Airlines Group SA (CDI) (IAG) 152.05p 2.70% Glencore (GLEN) 415.45p 2.54% Rolls-Royce Holdings (RR.) 308.50p 2.22% Flutter Entertainment (CDI) (FLTR) 15,840.00p 2.19% Croda International (CRDA) 4,527.00p 2.07%

FTSE 100 - Fallers

Haleon (HLN) 314.90p -2.02% 3i Group (III) 2,338.00p -1.27% Rentokil Initial (RTO) 397.70p -1.14% Reckitt Benckiser Group (RKT) 5,510.00p -0.72% GSK (GSK) 1,545.40p -0.57% BP (BP.) 448.95p -0.50% Tesco (TSCO) 297.50p -0.44% Next (NXT) 8,268.00p -0.34% Pearson (PSON) 953.60p -0.31% Smith & Nephew (SN.) 1,105.00p -0.27%

FTSE 250 - Risers

Hochschild Mining (HOC) 95.75p 7.83% Centamin (DI) (CEY) 98.80p 6.18% Tullow Oil (TLW) 32.00p 5.96% AJ Bell (AJB) 314.00p 5.72% Quilter (QLT) 103.50p 4.86% Wizz Air Holdings (WIZZ) 2,029.00p 4.59% Diversified Energy Company (DEC) 880.50p 4.20% International Distributions Services (IDS) 272.80p 4.16% easyJet (EZJ) 528.80p 4.05% Trustpilot Group (TRST) 176.60p 3.82%

FTSE 250 - Fallers

Senior (SNR) 161.80p -5.38% Greggs (GRG) 2,622.00p -2.74% TBC Bank Group (TBCG) 2,800.00p -2.10% North Atlantic Smaller Companies Inv Trust (NAS) 3,720.00p -1.85% Mitchells & Butlers (MAB) 261.00p -1.29% Hiscox Limited (DI) (HSX) 1,025.00p -1.25% Victrex plc (VCT) 1,346.00p -1.25% Close Brothers Group (CBG) 596.00p -1.08% BH Macro Ltd. GBP Shares (BHMG) 363.00p -0.95% PPHE Hotel Group Ltd (PPH) 1,180.00p -0.84%

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