US-China trade optimism helps push Footsie higher

OPTIMISM around the US-China trade talks and surprisingly good January retail figures cheered the

FTSE 100 on to a four-month high as the week closed.

The blue- chip index ended 0.55pc, or 39.67 points, higher at 7236.68 after top American and Chinese officials agreed to further talks next week in Washington.

It followed a week of intense negotiations in Beijing, as both sides sought to end a trade war that has weighed on global markets.

Stocks across Europe also gained a welcome boost from news the European Central Bank (ECB) is looking at issuing cheap loans to banks once again.

The loans would help countries such as Italy facing a funding ‘cliffedge’ next year when existing loans must be repaid.

Benoit Coeure, an ECB board member, told reporters: ‘It is possible, we are discussing it.’

It was the latest sign central banks are easing up on policies to hike interest rates amid jitters in the global economy.

UK stocks were also buoyed by a bounce-back on the High Street, with the performance defying gloomier analyst predictions.

Russ Mould, investment director at AJ Bell, said: ‘It is the old adage: You can have cheap stocks and good news, just not both at the same time.

‘There was a lot of bad news at the end of the year and UK markets were beginning to look very cheap,’ he said.

‘There are still some things being thrown at it, not least Brexit, but this week we have seen some notes of optimism.’

Mould added that the biggest challenge for markets recently has been the Federal Reserve in the US raising interest rates, the ECB withdrawing stimulus and the Bank of England talking a tough game.

‘But having tried going cold turkey on cheap money and after markets throwing a bit of a paddy, the central bankers have caved. That is what is giving markets a lift right now.’

However, Mould noted that safe haven assets such as gold also appeared to be back in vogue – perhaps because of a suspicion central banks were holding back on raising interest rates because of fears over the global economy.

Despite the optimism, you were unlikely yesterday to find much cheer at investment management firm Standard Life Aberdeen.

The company was the FTSE 100’s biggest faller, plunging by 6pc, or 14.8p, to 233.75p, after a discounted share offering. Reports also emerged it was weighing a fresh round of job cuts as part of a major costs overhaul, after a year of heavy outflows of client cash.

Britain’s biggest standalone asset manager saw more than £17bn yanked from its funds in 2018, according to industry tracker Morningstar. It was another day of misery for FTSE 250 firm Plus 500 as well.

The spread-betting firm has lost nearly one third of its value this week after a profit warning and a fresh report that the company may not have told investors about a notinsignificant £80m hit to its finances in 2017. It blamed a ‘drafting error’.

The stock fell 12.2pc, or 128.5p, to 921.5p, and dragged competitors IG Group (down 0.3pc, or 2p, to 596p) and CMC Markets (down 5.4pc, or 6.2p, to 108p) lower too.

Warehouse investor and property giant Segro raised £451m in a share placing. It issued 71m shares at 635p each, which it said will allow it to take advantage of new development opportunities. The stock closed down 1.3pc, or 8.2p, at 640p. Hotel group Millennium & Copthorne said Brexit uncertainty was making it harder for its London hotels to hire EU workers.

The luxury hotel chain also revealed profits last year plunged 28pc to £106, although its shares closed 1.9pc, or 8.5p, higher at 465.5p – a sign traders were braced for worse numbers.