The FTSE 100 was up 0.4 per cent at 6,594 in early deals after closing Friday’s session at 6,567.24, its highest finish since 6 October. However, gains on the FTSE 250 were limited after a profit warning and proposed rights issue at Serco.

Markets were digesting some mixed economic data from China released overnight as the trade surplus widened more than expected in October from $31bn to $45.41bn, albeit mainly because of slowing import growth.

Meanwhile, the annual rate of Chinese consumer-price index (CPI) inflation held steady at 1.6 per cent last month, while producer-price index (PPI) deflation worsened from -1.8 per cent to -2.2 per cent.

However, analyst Craig Erlam from Alpari UK said: “With the PPI falling 2.2 per cent on the year, again due to weaker prices in commodity imports, this is both positive for corporate profitability while the CPI reading is well below the People’s Bank of China’s 3.5 per cent target, opening the door to further targeted stimulus, It’s win-win from the markets perspective.”

Economic data is likely to be thin on the ground over the next two trading sessions, though things will pick up on Wednesday with the release of the Bank of England’s quarterly Inflation Report.

Serco plummets, Cairn jumps

Under-pressure business-to-government (B2G) outsourcing group Serco saw shares sink by as much as a third early on as the company delivered a profit warning to investors and said it is planning a rights issue after writing down the value of its business by £1.5bn.

Regarding the impairments, chief executive Rupert Soames said: “Whilst it is a bitter pill, it is better for all concerned that we swallow it now and establish a really solid foundation on which to build Serco’s future.”

The news also dragged B2G outsourcing peers G4S and Capita firmly lower.

Leading the upside on the FTSE 250 was Cairn Energy as the oil explorer announced a “significant” find off the coast of Senegal, with preliminary estimates pointing to commercial viability.

Mining stocks were performing well on the whole, including blue chips Anglo American, Antofagasta, Randgold, Fresnillo and Glencore.

Even platinum producer Lonmin was making gains despite saying that full-year underlying profits sank 71 per cent as a result of a five-month strike in South Africa, which curtailed production and sent costs soaring.

FTSE 100 – Risers
Antofagasta (ANTO) 718.00p +2.06%
Anglo American (AAL) 1,389.00p +1.80%
Randgold Resources Ltd. (RRS) 4,200.00p +1.65%
Fresnillo (FRES) 746.00p +1.63%
Ashtead Group (AHT) 1,059.00p +1.53%
Petrofac Ltd. (PFC) 1,134.00p +1.43%
Shire Plc (SHP) 4,230.00p +1.41%
Tullow Oil (TLW) 513.50p +1.38%
BHP Billiton (BLT) 1,698.50p +1.34%
Glencore (GLEN) 329.50p +1.29%

FTSE 100 – Fallers
G4S (GFS) 259.50p -1.96%
Hargreaves Lansdown (HL.) 1,024.00p -1.73%
Royal Mail (RMG) 456.50p -1.38%
Vodafone Group (VOD) 205.05p -0.92%
Capita (CPI) 1,093.00p -0.91%
Kingfisher (KGF) 288.80p -0.76%
Babcock International Group (BAB) 1,067.00p -0.74%
Burberry Group (BRBY) 1,508.00p -0.72%
Sainsbury (J) (SBRY) 259.80p -0.69%
BT Group (BT.A) 371.10p -0.64%

Source: ShareCast