London's FTSE 100 index was lifted by mining and oil firms on Monday as improved commodity prices saw the index outperform European bourses.
Analysts will be watching soaring oil prices ahead of Wednesday's latest UK inflation print, with the reading set to accelerate to near 6% in February.
The FTSE 100 index closed up 37.66 points, or 0.5%, at 7,442.39. The FTSE 250 ended down 150.06 points, or 0.7%, at 21,006.56, and the AIM All-Share closed up 2.81 points, or 0.3%, at 1,037.86.
The Cboe UK 100 ended up 0.7% at 740.96, the Cboe UK 250 closed down 0.6% at 18,525.90, and the Cboe Small Companies ended up 1.1% at 14,942.04.
In European equities on Monday, the CAC 40 in Paris and the DAX 30 in Frankfurt both fell 0.6%.
The FTSE 100's heavyweight mining and oil sector was riding high on Monday, outperforming European counterparts, on improved commodity prices. Oil prices were lifted by the ongoing Ukraine conflict, after Ukraine rejected a Russian ultimatum to surrender the besieged port city of Mariupol, and from renewed attacks by Yemen's Iran-backed Huthi rebels in Saudi Arabia.
Brent oil was quoted at $114.84 a barrel at the London equities close Monday, surging from $107.51 late Friday.
Shares in BP and Shell both rallied 4.1%, while miners such as Anglo American and Rio Tinto gained 6.1% and 3.3% respectively.
At the top of the blue-chip index was Antofagasta, up 8.1% after Canada's Barrick said it has agreed a deal with authorities in Pakistan that will see work at the Reko Diq copper and gold mine resume, though peer Antofagasta will eventually step aside as a stakeholder.
Antofagasta will exit the project and be replaced by state-owned enterprises in Pakistan. Antofagasta's exit process will see the project reconstituted under Tethyan Copper Co, a joint-venture controlled by Antofagasta and Barrick. A consortium of state-owned firms in Pakistan will then acquire shares in the TCC unit that owns the project, in a $900 million deal.
However, the rise in oil prices was not good news for travel and leisure. easyJet shares fell 3.4% and British Airways parent International Consolidated Airlines declined 1.0%. In Dublin, Ryanair shares fell 0.3%.
Airline shares were also lower in New York amid worries over rising oil prices, while aerospace firm Boeing was further hit after news a China Eastern passenger jet carrying 132 people crashed onto a mountain in southern China on Monday causing a large fire, shortly after losing contact with air traffic control and dropping thousands of metres in under three minutes.
The Boeing 737-800 flight from the city of Kunming to the southern hub of Guangzhou ‘lost airborne contact over Wuzhou’ in the Guangxi region on Monday afternoon, according to the Civil Aviation Administration of China.
Boeing shares were down 3.1% in early afternoon trade, weighing on the Dow Jones index.
Stocks in New York were mixed at the London equities close, with the Dow Jones down 0.3%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.1%.
The dollar was mostly higher at the start of the week, though weakened against the pound. Sterling is gearing up for a busy week, with the UK government's mini-budget and the latest inflation data both due on Wednesday.
Chancellor of the Exchequer Rishi Sunak appeared on Sunday to hint at help for motorists in his so-called mini-budget, with measures to prevent filling up cars from being ‘prohibitively expensive’ expected to be unveiled on Wednesday. There were also reports the chancellor is considering raising the threshold at which people start paying national insurance.
Just hours before Sunak's appearance, data is expected to show the UK's annual inflation rate for February accelerated to 5.9% from 5.5% in January. The Bank of England last week warned inflation is likely to hit 8% in the second quarter of 2022, and could even be propelled further higher later this year as the war in Ukraine intensifies cost pressures.
The pound was quoted at $1.3192 at the London equities close Monday, up compared to $1.3178 at the close on Friday.
The euro stood at $1.1033 at the European equities close Monday, lower against $1.1061 at the same time on Friday. Against the yen, the dollar was trading at JP¥119.25, up compared to JP¥119.15 late Friday.
Gold was quoted at $1,936.69 an ounce at the London equities close Monday, soft against $1,938.46 at the close on Friday.
Back in London, Pendragon shares rallied 22% after Sky News reported the firm rejected a secret £400 million takeover approach from major shareholder Hedin Group.
According to Sky News, Hedin Group, which operates more than 200 vehicle showrooms in Belgium, Norway, Sweden and Switzerland through its subsidiary Hedin Bil, tabled a secret 28 pence offer for Pendragon several weeks ago. The approach was not disclosed to Pendragon's investors, and is said to have been rejected by the company's board, according to the report.
Ted Baker was also boosted by M&A, shares ending up 7.6% to add to Friday's 17% rally after New York private equity firm Sycamore Partners last week said it was in ‘the early stages’ of a possible cash offer for the London-based clothing retailer.
Tuesday's economic calendar has eurozone construction output at 0900 GMT.
The UK corporate calendar on Tuesday has full-year results from DIY retailer Kingfisher and online review platform Trustpilot and half-year results from IT infrastructure services provider Softcat.
By Lucy Heming; lucyheming@alliancenews.com
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