(Alliance News) - Blue-chip equity markets in Europe bounced back on Tuesday, after being routed at the start of the week due to debt worries at Chinese real estate firm Evergrande, with investors now looking to a raft of central bank updates.
M&A action propelled London's FTSE 100 closer to the 7,000 point mark, a threshold it fell below at the end of last week. Meanwhile, lighting up markets in Amsterdam, and also London-listed investor Pershing Square, newly-floated record company Universal Music Group soared on its stock market debut.
"Sentiment improved a little on Tuesday after Monday's big rout amid concerns about the fallout from Evergrande's debt woes had roiled markets. The markets started to recover late in the day on Monday as dip buyers took advantage of beaten down prices, although it didn't prevent the S&P from posting its biggest lose since May," ThinkMarkets analyst Fawad Razaqzada commented.
"But by Tuesday morning, calm had returned to the markets and US futures were trading higher alongside European stocks. The better mood is a reflection of optimism about travel returning to some form of normalcy after the US announced it will allow fully vaccinated people to travel to the US. This helped underpin travel stocks, while crude oil and energy firms also rebounded."
The FTSE 100 index closed up 77.07 points, or 1.1%, at 6,980.98. The mid-cap FTSE 250 index ended up 209.67 points, 0.9%, at 23,611.39. The AIM All-Share index closed up 5.13 points, 0.4%, at 1,260.13.
The Cboe UK 100 index ended up 0.9% at 693.16. The Cboe 250 added 0.9% at 21,376.42. The Cboe Small Companies rose 0.5% at 15,420.69.
In mainland Europe, the CAC 40 stock index in Paris ended up 1.5% and the DAX 40 index in Frankfurt closed 1.4% higher.
Shares in a trimmed down media company Vivendi fell 19% in Paris. Universal Music Group surged 36% in Amsterdam.
Vivendi is keeping a chunk of UMG, but has already sold off a 20% stake to Chinese tech firm Tencent and 10% to US financier Bill Ackman, whose London listing Pershing Square ended up 5.0% on Tuesday.
Elsewhere, in London, Entain shares jumped 18%. The Ladbrokes owner confirmed it has received more US takeover interest, this time from New York-listed fantasy sports and online betting firm Draftkings.
Entain said it received a cash and shares proposal, though did not outline any other terms of the tilt. Entain said there can be no certainty a firm offer will be made and added that Draftkings now has until October 19 to make a bid for the company, under city rules.
Earlier on Tuesday, CNBC reported Draftkings made a proposal to acquire Entain.
According to CNBC, the offer from Draftkings will largely come in the form of stock. The tilt values Entain shares at 2,500 pence, implying a market capitalisation of GBP14.64 billion.
Entain shares closed at 2,266.00p, giving it a market capitalisation of GBP13.27 billion.
Draftkings shares were down 6.8% in New York.
In London, Paddy Power owner Flutter Entertainment and 888 Holdings rose 3.5% and 6.4%, respectively.
Royal Dutch Shell's 'A' stock rose 3.6% and is 'B' shares closed up 3.3%. The oil major said on Monday it is selling its assets in the shale-oil rich Permian Basin of the US to rival ConocoPhillips for USD9.5 billion.
Shell plans to use the proceeds from the sale of the assets, which produce an average of 175,000 barrels per day, to fund a USD7 billion payout to its shareholders and strengthen its finances.
The assets sold by Shell's US unit include 225,000 acres of land in Texas with more than 600 miles of oil, gas and water transmission pipes, according to ConocoPhillips.
In the FTSE 250, National Express, also involved in M&A activity, ended the best performer, up 7.6%. The transport company confirmed it is in discussions with peer Stagecoach over a possible all-share combination.
The statement confirmed a report by Bloomberg News that National Express, which has a market capitalisation of GBP1.47 billion, was looking to make a takeover bid for Stagecoach.
Under the deal terms, it is expected that Stagecoach shareholders would receive 0.36 of a new National Express share for each Stagecoach share, resulting in them owning around 25% of the combined group.
Stagecoach shares closed up 21% at 82.36p, giving it a market value of GBP453.69 million.
Back among London's blue chips, Kingfisher closed down 5.1% the worst performer, as sales growth has slowed.
However, the DIY retailer saying it delivered a strong financial performance in the first half of its financial year and declaring a share buyback.
For the six months to July 31, revenue was GBP7.10 billion, up 20% from GBP5.92 billion last year, and pretax profit was GBP677 million, up 71% from GBP398 million. Kingfisher posted like-for-like sales growth of 23% from a year before, with strong performances in the UK & Ireland, France, Iberia and Romania.
CMC Markets analyst Michael Hewson commented: "Sales at B&Q fell back by 1.2%, in Q2, although this was more than offset by the 82% rise in Q1. Q3 sales to date have also been a little disappointing, down 4.2%, though this could improve."
Brent was quoted at USD73.84 a barrel late Tuesday down from USD74.58 late Monday. Gold stood at USD1,781.03 an ounce, up from USD1,764.07.
Equity prices in New York were higher at the time of the London close, though paring some earlier gains. The Dow Jones Industrial Average was up 0.1%, the S&P 500 up 0.2% and the Nasdaq Composite was 0.4% higher.
"European markets have been much more adept at holding on to their gains today than their US counterparts, where pre-FOMC nerves have clearly put pressure on the S&P 500, Dow and Nasdaq. At first it seemed like the selling was done across the globe, but there is still a broad pocket of nervousness on Wall Street. Evidently, investors there are concerned that the tapering announcement may come with hints of what the Fed might do next regarding rate increases as well, something much more concerning for markets," IG analyst Chris Beauchamp commented.
The US Federal Reserve announces its latest interest rate decision at 1900 BST on Wednesday. The People's Bank of China and the Bank of Japan announce their latest monetary policy decisions overnight.
The pound was quoted at USD1.3643 at the London equities close on Tuesday, down from USD1.3678 on Monday. The euro was priced at USD1.1714, down from USD1.1734. Against the Japanese yen, the dollar was trading at JPY109.26, down from JPY109.46.
Outside of central banks, Wednesday's economic calendar has the latest Ifo economic forecast for Germany at 0900 BST.
The local corporate calendar has a trading statement from safety equipment firm Halma, full-year results from personal and home care products maker PZ Cussons and interim earnings from over-50s' travel and insurance provider Saga.
By Eric Cunha; ericcunha@alliancenews.com
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