London open: stocks rise on Syria developments, China data
US benchmarks rose by an average 1% on Monday after Russian Foreign Minister Sergei Lavrov urged Syria to place any chemical weapons they may have under international control in an attempt to avoid action from the States.
The news that Syrian counterpart Walid Muallem apparently welcomed the proposal has given investor sentiment a large boost this morning, especially given that President Barack Obama said that he would put air strikes on hold if Bashar al-Assad’s government follows the initiative.
Market Analyst Craig Erlam from Alpari said that a US-led military response had looked “inevitable” until now, but reports that Syria has welcomed Russia’s suggestion “could be a game changer, although at this stage there has not been confirmation that Assad would approve such a move”.
Supporting stocks further this morning was a continuing improvement in economic data from China with the third-quarter outlook for the Asian powerhouse continuing to brighten. Industrial output, fixed-asset investment and retail sales strengthened during the month of August, with all three economic indicators rising by more than expected.
Mining stocks were benefitting from increased risk appetite this morning despite metals prices taking a hit. Glencore Xstrata was leading the upside on London’s blue-chip index after lifting its synergy target – following its merger – to at least $2bn next year as the miner vowed to cut costs and improve operational efficiency.
Resource peers Rio Tinto and Anglo American were also higher early on.
Airline groups IAG and easyJet were flying higher this morning as crude continued to pull back from its recent highs as fears over turmoil in the Middle East ease. Elevated oil prices have pressured both stocks over the last few weeks on concerns over the knock-on effects to jet fuel costs.
Rolls-Royce gained after scoring a $175m contract with Asia Gas Pipeline (AGP) for services on a natural gas pipeline in Kazakhstan.
Leading the downside was Costa and Premier Inn owner Whitbread after seeing sales growth slow down from 13.8% in the first quarter to just 10.8% in the second as the hot summer weather hit demand at its coffee shops.
Drinks giant SABMiller was on the climb this morning after HSBC upgraded the stock to ‘overweight’, while consumer products group Unilever was lifted by Deutsche Bank to ‘buy’.