(Alliance News) - After a subdued July, London stocks started August on the front foot, with the mid-cap FTSE 250 index outperforming as shares in Meggitt soared nearly 60% on an agreed takeover offer.
The FTSE 100 index was up 66.85 points, or 1.0%, at 7,099.15 early Monday. The mid-cap FTSE 250 index was up 310.89 points, or 1.4%, at 23,259.72 - hitting a record high of 23,306.07 in early dealings.
The AIM All-Share index was up 0.2% at 1,254.08.
The Cboe UK 100 index was up 0.9% at 707.17. The Cboe 250 was up 1.4% at 21,033.40, and the Cboe Small Companies up 0.2% at 15,264.16.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 0.9% early Monday.
"The first trading day of August is starting with positive momentum," said Naeem Aslam, chief market analyst at AvaTrade.
"European and US stock indices have scored stellar performance so far this year, and we have seen decent gains on a month-on-month basis," said Aslam. "Most of these gains are purely due to the presence of the loose monetary policy. In addition to this, we also had ample support from fiscal policies as well."
The latest fiscal boost came as US senators on Sunday finalized a historic, trillion-dollar infrastructure proposal that is expected to be approved within days.
If passed by Congress and signed into law, the bill would pump historic levels of federal funding into fixing US roads, bridges and waterways, ensuring broadband internet for all Americans and expanding clean energy programs.
The bill, a cornerstone of President Joe Biden's sweeping domestic agenda, is about 2,700 pages long and provides for USD1 trillion in funding.
Amid the bullish mood, the price of safe-haven gold pulled back. Gold was quoted at USD1,807.60 an ounce early Monday, lower than USD1,821.81 on Friday.
As a result, precious metals miner Fresnillo was the worst performer in the FTSE 100 in London, though only down 0.7%.
Brent oil also eased, trading at USD74.72 a barrel, down from USD76.29.
London's FTSE 250 index was boosted by M&A news, with shares in Meggitt rocketing 59% to 746.40 pence after Parker-Hannifin tabled a takeover deal worth GBP6.3 billion.
Parker-Hannifin has offered 800 pence per Meggitt share in cash, representing a premium of 71% to Friday's closing price of 469.1p.
"Parker believes Meggitt is very well aligned with Parker and the goals of The Win Strategy, Parker's global business system, representing a unified strategic vision for its team members worldwide," said Cleveland, Ohio-based motion and control technologies firm Parker-Hannifin.
The acquisition of Meggitt nearly doubles the size of Parker-Hannifin's Aerospace Systems segment.
It has made commitments to the UK government, such as ensuring Meggitt will continue to meet its contractual obligations to the state and retaining its UK headquarters. Each of Meggitt's existing divisions will be operated under the combined Parker-Meggitt name.
Separately, Meggitt reported a 26% decline in interim revenue to GBP680.0 million, though swung to a pretax profit in the first half of 2021 of GBP33.6 million from a loss of GBP368.4 million a year ago. While noting the importance of its dividend to shareholders, Meggitt decided not to pay one for the half in light of "ongoing market conditions".
Sanne Group rose 8.4% to 915p as it revealed advanced talks with Apex over a possible buyout worth 920p per share in cash. This would represent a 53% premium to Sanne's closing share price of 603p on May 13, the day before the commencement of the current offer period.
With 162.2 million shares in issue, this offer would value Sanne as a whole at just shy of GBP1.5 billion.
In Asia on Monday, the Japanese Nikkei 225 index ended up 1.8%. In China, the Shanghai Composite closed up 2.0%, while the Hang Seng index in Hong Kong was up 1.0% in late trade.
The S&P/ASX 200 in Sydney closed up 1.3%.
As Monday's well-stocked economic data calendar kicked off, China's manufacturing sector eked out some growth in July, but saw its weakest improvement for 15 months. The headline seasonally adjusted purchasing managers' index slipped to 50.3 points in July from 51.3 in June. This left it barely above the neutral 50.0 point mark.
In Japan, meanwhile, the manufacturing sector continued to expand last month, having seen its strongest improvement since April as output and new orders drove its expansion. The headline au Jibun Bank Japan manufacturing PMI – a composite single-figure indicator of manufacturing performance - rose to 53.0 in July from 52.4 in June.
Against the yen, the dollar softened to JPY109.73 from JPY109.74 late Friday.
Still to come are manufacturing PMIs from Germany, the eurozone and the UK at 0855 BST, 0900 BST and 0930 BST respectively. A US Markit PMI is due at 1445 BST and the ISM one is reported at 1500 BST. Outside of PMIs, German retail sales are at 0700 BST.
Ahead of the data, sterling was quoted at USD1.3927 early Monday, higher than USD1.3898 at the London equities close on Friday. The euro traded at USD1.1884, up from USD1.1858 late Friday.
By Lucy Heming; lucyheming@alliancenews.com
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