Stocks had pared gains sharply late on Friday on reports that Ukraine’s military had shot down Russian armoured vehicles that had crossed the border.

Nevertheless, reports of progress in crisis talks between Ukrainian Foreign Minister Pavlo Klimkin and his Russian counterpart Sergei Lavrov in Berlin were helping to lift sentiment on the markets on Monday.

The FTSE 100 was up 0.7% in early trading at 6,734.

“However, with the Russian ‘aid’ convoy now at the border, the situation still remains a geopolitical tinder box just waiting for the smallest ember of trouble to set things alight, so despite the positive start, caution remains high,” said Jonathan Sudaria, a dealer at Capital Spreads.

UK rates, house prices

Comments from Bank of England Governor Mark Carney were also in focus for investors over the weekend after he said that the central bank may not wait for wages to grow before lifting interest rates.

In an interview with the Sunday Times, Carney said that policymakers “have to have the confidence that real wages are going to be growing sustainably” before tightening policy, but said “we don’t have to wait for the fact of that turn to do so”.

As such, minutes of the latest meeting of the BoE’s Monetary Policy Committee due out on Wednesday will be closely watched by the market.

In other UK news, Rightmove data showed a record 2.9% month-on-month drop in asking prices across the UK in August to £262,401 as the traditional summer lull dampened demand. The London market was particularly in focus as asking prices dropped 5.9% from July to £552,783.

Bovis jumps, supermarkets fall

Bovis Homes was a high riser after seeing profits rocket in the first half with operating margins nearly five percentage points higher than last year, prompting the housebuilder to hike its interim dividend by 200%.

Pre-tax profit in the six months to 30 June totalled £49.4m, up 166% over the year before, on revenues that jumped 75% to £322.1m, as completions reached a record level and sales prices improved.

Supermarket giants Tesco and Wm Morrison were among the worst performers in early trading.

Mining group Rio Tinto edged higher after saying it will decide on the future of its majority stake in a long-dormant copper mine in Papua New Guinea.

Precious metal miners, however, such as Randgold Resources and Centamin were under pressure as gold prices fell.

FTSE 100 – Risers
Hargreaves Lansdown (HL.) 1,104.00p +2.22%
ARM Holdings (ARM) 923.50p +1.82%
Aberdeen Asset Management (ADN) 432.90p +1.57%
Aggreko (AGK) 1,735.00p +1.46%
SABMiller (SAB) 3,297.50p +1.45%
Anglo American (AAL) 1,600.00p +1.43%
Associated British Foods (ABF) 2,847.00p +1.43%
Sage Group (SGE) 397.80p +1.43%
Burberry Group (BRBY) 1,479.00p +1.37%
easyJet (EZJ) 1,306.00p +1.32%

FTSE 100 – Fallers
Tesco (TSCO) 245.00p -1.21%
Barratt Developments (BDEV) 351.00p -0.82%
Randgold Resources Ltd. (RRS) 5,045.00p -0.39%
Morrison (Wm) Supermarkets (MRW) 172.60p -0.29%
Reckitt Benckiser Group (RB.) 5,275.00p -0.28%
Prudential (PRU) 1,418.50p -0.11%

Source: ShareCast