A start of a fresh round of peace talks between Ukraine and Russia on Tuesday gave a lift to European stock markets and the euro, amid hopes the two sides can ‘put an end to this tragedy’.
The FTSE 100 index was up 97.50 points, or 1.3%, at 7,570.64 midday Tuesday. The mid-cap FTSE 250 index rose 272.55 points, also 1.3%, to 21,342.58. The AIM All-Share index was up 3.41 points, or 0.3%, at 1,041.00.
The Cboe UK 100 index was up 1.2% at 753.39. The Cboe 250 was up 1.5% at 18,869.28, and the Cboe Small Companies was 0.4% higher at 15,237.22.
In mainland Europe, the DAX 40 in Frankfurt rallied 2.0%. The CAC 40 in Paris, bolstered by gains for car makers and luxury retailers, gained 2.5%.
In Paris, Renault rose 5.6% and Fiat owner Stellantis added 4.8%. LVMH rose 4.1% and fellow luxury goods seller Hermes was up 4.5%.
Ukrainian and Russian negotiators held face-to-face talks in Istanbul on Tuesday as Ukraine resumed evacuations from territory occupied by Russian forces and clung on in the besieged city of Mariupol.
The talks were taking place with Turkish President Recep Tayyip Erdogan in attendance and under the shadow of shock allegations that delegates were poisoned at a previous round of negotiations.
Erdogan called on the delegations to ‘put an end to this tragedy’, saying both Russia and Ukraine both have ‘legitimate concerns’ ahead of the meeting at the Dolmabahce Palace.
It is now more than a month since Russian President Vladimir Putin's tanks rolled into Ukraine, hoping to cripple or oust the democratic government in Kyiv.
‘Having tripped over on Monday afternoon amid concern about China lockdowns and the conflict in Ukraine, the FTSE 100 sprang back to its feet on Tuesday on hopes the latest round of peace talks between Moscow and Kyiv might yield tangible progress,’ AJ Bell analyst Russ Mould commented.
‘Suggestions the Russian side are softening some of their previous demands raised spirits, but the market is unlikely to take anything for granted when it comes to the machinations of Vladimir Putin.’
Global equities markets have been resilient despite facing waves of worries, including surging inflation, rising Covid-19 cases in China, and the shocking conflict in Ukraine. So far in March, the FTSE has risen 1.6%.
Mould added: ‘This stoicism is likely to face continuing tests as the impact of mounting prices and the actions of central banks continue to feed through, not to mention the ongoing geopolitical concerns. The FTSE 100 has proved to be better placed than most thanks to relatively cheap valuations, strong income credentials, and exposure to surging commodity markets; however it is not immune to the current pressures.’
In currency markets, the dollar was mixed, though the euro was a notable out-performer.
Sterling was quoted at $1.3100 early Tuesday in London, firm against $1.3090 at the London equities close on Monday. The euro traded at $1.1052 early Tuesday, up from $1.0973.
The dollar was faring better against the yen, rising to JP¥123.54 from JP¥123.32.
ActivTrades analyst Ricardo Evangelista commented: ‘The single currency is finding support as Russian and Ukrainian officials are due to meet later today in Turkey. The eurozone is particularly vulnerable to the conflict on its eastern edge, because of the geopolitical risk it poses and the continent's dependency on Russian gas and oil.
‘A positive outcome from the talks, which in this case would be a ceasefire and potentially even an agreement to bring the hostilities to an end, would release some of the pressure under which the single currency has been under, helping to lift the confidence of economic agents in the region. However, such an outcome is far from guaranteed, and therefore today's gains must not be taken as the beginning of a recovery.’
The euro has struggled in the wake of the invasion. It fell as low as $1.0804 earlier in March. While it has since mounted somewhat of a recovery, the single currency remains below the $1.13 it fetched just before the invasion.
On the London Stock Exchange, Barclays sat at the foot of the FTSE 100 index, down 3.8%.
The bank continued to fall after tumbling 8.7% on Monday. Barclays on Monday had admitted to selling more financial products to investors than it was allowed to. It forecast a £450 million hit from buying some of the securities back.
On Tuesday, JP Morgan downgraded Barclays to 'neutral' from 'overweight'.
Postal service provider Royal Mail fell 2.7% after Deutsche Bank cut the stock to 'sell' from 'buy'.
Housebuilder Bellway was the worst performing mid-cap stock. Despite largely positive interim numbers, the stock was down 5.5%.
Bellway warned of a potentially chunkier provisions for flammable cladding than initially expected.
‘We also recognise the government's ambition that builders agree to self-remediate life-critical fire safety issues, over an extended timespan of 30 years. This is beyond the scope of our existing provision, and if agreed, it would require Bellway to extend the period covered by its assessment by a further 18-to-20 years and would result in a significant, additional provision,’ Bellway said.
For the first half ended January 31, Bellway's revenue rose 3.5% yearly to £1.78 billion from £1.72 billion. Pretax profit climbed 9.8% to £307.6 million from £280.2 million a year earlier.
Bellway lifted its by payout 29% to 45.0 pence from 35.0p.
Just Eat Takeaway.com rose 3.9% after Exane BNP raised the stock to 'outperform' from 'neutral'.
Fellow takeaway delivery firm Deliveroo was 7.6% higher.
Deliveroo has joined forces with WH Smith as it continues to expand further from its traditional takeaway delivery business. The online delivery operator said it will be able to deliver a raft of products, from printer cartridges to bestselling novels, to customers in 20 minutes.
WH Smith shares were up 1.8%.
Elsewhere in the food delivery sector, oil major BP and New York-listed Uber announced plans to expand a partnership.
By 2025, convenience products from BP's filling station stores will be available on the Uber Eats platform in 3,000 retail locations.
‘The new partnership covers retail sites in Australia, New Zealand, Poland, South Africa and the west coast of US. Sites in the UK and eastern US will be added to the app for the first time this year, with plans to launch in other European markets from 2023,’ BP said.
BP shares were up 1.4%, while Uber was 1.4% higher in pre-market trade in New York.
Stocks in New York are called higher. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are called up 0.4%.
North Sea benchmark Brent crude oil rose to $113.87 a barrel midday Tuesday in London, versus $111.48 late Monday.
Gold was quoted at $1,914.87 an ounce, lower than $1,937.20 on Monday.
Still to come on Tuesday's economic calendar is a US consumer confidence reading at 1500 BST.
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