Investor optimism on US-China relations pushes FTSE 100 higher

The FTSE 100 rose on Monday as investors grew bullish on the latest round of trade talks between the US and China, while the pound weakened following downbeat economic data.

London’s top index closed 57.93 points, or 0.82%, higher at 7,129.11, while Germany’s DAX grew 1.04% and France’s CAC increased 1.08%.

David Madden, market analyst at CMC Markets, said: “Equity markets are off the highs of the session but are still firmly in positive territory as dealers are optimistic about the latest round of US-China trade talks.

“Representatives from both sides are set to meet in Beijing this week, and investors are a little on the optimistic side.

“The talks that have taken place so far haven’t managed to bridge the divide, but traders are still hopeful, nonetheless.”

Meanwhile the pound, which has been a barometer of Brexit since the 2016 referendum, weakened flowing sluggish economic data.

The British economy grew 0.3% in the final quarter last year and on an annual basis, the economy grew 1.4% – its lowest pace of expansion since 2012.

Sterling was down 0.66% against the US dollar at 1.286 and was flat versus the euro at 1.140 at the London market close.

Fiona Cincotta, senior market analyst at City Index, said that economic growth slowed because businesses cut investment, which is “completely logical” given that there is just 26 days to go before Britain leaves the European Union and there is no deal.

She said economic growth is “expected to get worse before it gets better” as the Bank of England forecasts growth of just 1.3% in 2019, which is predicated on an orderly Brexit.

In corporate news, the competition watchdog extended the deadline for its decision on the proposed merger between supermarkets Sainsbury’s and Asda by almost two months, citing the scope and complexity of the deal.

The Competition and Markets Authority (CMA), which has been probing the deal, has pushed back the date for a final decision to April 30.

Sainsbury’s shares closed up 2p to 293.9p.

Petrofac is facing the prospect of a £400 million payout to investors amid legal action linked to an alleged bribery scandal at the oil services firm.

Litigation funder Innsworth and law firm Keystone said that they are analysing potential claims and are actively putting together a group of shareholders to launch action against Petrofac.

Petrofac shares rose 5.5p to 388.5p.

Just Eat was again criticised by shareholder Cat Rock over recent board appointments and has been ordered to seek a merger.

Cat Rock Capital, which owns 2% of the firm, urged the food delivery firm in an open letter to merge with a “well-run industry peer”.

Just Eat shares grew 26.8p to 730.8p.

Brent crude, the international benchmark, traded down 1.22% at 61.32 US dollars (£47.67).

The biggest risers on the FTSE 100 were TUI up 44.8p to 958.2p, Smurfit Kappa up 84p to 2,232p, Ocado up 35p to 939.4p, and Just Eat up 26.8p to 730.8p.

The biggest fallers on the FTSE 100 were Antofagasta down 31p to 840.4p, Smith & Nephew down 45.5p to 1,469.5p, Anglo American down 22.2p to 1,912.6p, and GlaxoSmithKline down 14.8p to 1,550p.

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