London’s FTSE 100 index underperformed the rest of Europe in early trade on Monday, with caution lingering amid peace talks between Russia and Ukraine.
A Covid flare-up in China and an imminent US interest rate decision were also dragging on sentiment at the start of the week.
The FTSE 100 index was down 0.55 of a point at 7,155.09 early Monday. The mid-cap FTSE 250 index was up 221.51 points, or 1.1%, at 20,428.12. The AIM All-Share index was up 4.89 points, or 0.4%, at 1,000.13.
The Cboe UK 100 index was up 0.4% at 714.13. The Cboe 250 was up 1.3% at 18,007.53, and the Cboe Small Companies down 0.4% at 14,426.92.
In mainland Europe, the CAC 40 stock index in Paris rose 0.7% and the DAX 40 in Frankfurt was 1.0% higher.
‘The week starts with continued focus on peace talks in Ukraine - even though there seems to be no let-up in Russia's military pressure at all,’ commented ING.
Russia said Sunday that negotiators were making headway at talks to resolve fighting in Ukraine, more than two weeks after President Vladimir Putin ordered his army over the borders of its pro-Western neighbour.
However, talks have yet to yield a ceasefire and Russian forces have shown no sign of easing their onslaught.
In an attack dangerously close to NATO member Poland, Russian air strikes Sunday on a Ukrainian military training ground near the border killed at least 35 people and wounded more than 130.
But in a sign Moscow may have underestimated the challenge it would face, US officials told the media Russia had asked China for military and economic aid for the war. Moscow also asked Beijing for economic assistance against the crippling sanctions imposed against it, the New York Times said, citing anonymous officials.
In the FTSE 100, Phoenix Group was up 1.7% after the insurer lifted its dividend and revealed a new payout policy after an ‘outstanding’ 2021.
For 2021, Phoenix generated an operating profit of £1.23 billion, up from £1.20 billion in 2020, reflecting the contribution of a full year of profit from its ReAssure business and increased bulk purchase annuity new business in the period.
The London-based insurance services provider reported record cash generation of £1.72 billion in 2021, exceeding its £1.5 billion to £1.6 billion target range for the year and just ahead of the £1.71 billion generated in 2020.
Phoenix declared a final dividend of 24.8 pence, up 3% on a year before in its inaugural organic dividend increase. This took the year’s dividend to to 48.9p, having paid a total dividend of 47.5p in 2020.
At the other end of the large-caps, Rio Tinto was the worst performer, down 3.6%, after the Anglo-Australian miner proposed to buy the 49% of Canada’s Turquoise Hill it does not already own.
Rio said Turquoise Hill minority shareholders would receive C$34 in cash per Turquoise Hill share, representing a premium of 32% to Turquoise Hill’s last closing share price on the Toronto Stock Exchange.
The offer would value the Turquoise Hill minority share capital at $2.7 billion. The offer follows the agreement reached between Rio Tinto, Turquoise Hill and the government of Mongolia to move the Oyu Tolgoi project forward, reset the relationship between the partners and approve commencement of underground operations.
Reckitt Benckiser was down 1.1% after Bernstein downgraded the household goods company to ‘underperform’ from ‘market perform’.
In the FTSE 250, China-focused investment trusts Fidelity China Special Situations and Schroder AsiaPacific Fund were the worst performers, down 5.5% and 3.0% respectively, tracking steep falls in Asian equity markets.
In China on Monday, the Shanghai Composite ended down 2.2%, while the Hang Seng index in Hong Kong finished down 5.0%.
The selling came after news Sunday that China has placed all 17 million residents in Shenzhen under lockdown as it battles a flare-up of Covid-19 cases across the country. Public transport has been suspended and officials have told all residents to stay at home, with the lockdown set to last until March 20 while three rounds of mass testing are carried out. The move has led Foxconn, which is a key supplier for Apple and maker of iPhones, to halt operations in the city.
The news compounded problems for China’s tech industry, which has been under increasing pressure from Beijing’s regulatory crackdown on the private sector.
Elsewhere in Asia on Monday, the Japanese Nikkei 225 index closed up 0.6%. The S&P/ASX 200 in Sydney closed up 1.2%.
The pound was quoted at $1.3048 early Monday, down from $1.3075 at the London equities close Friday.
The euro was priced at $1.0950, soft from $1.0955. Against the yen, the dollar was trading at JP¥117.73, up from JP¥117.05.
Brent oil was quoted at $110.21 a barrel on Monday morning, down from $111.92 late Friday. Gold stood at $1,970.48 an ounce, lower against $1,982.75.
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