London stocks soar on takeover news; pound sinks on Brexit woes

Moody's cut the outlook for Britain's debt to negative from stable (AFP Photo/Justin TALLIS) (AFP/File)

London stocks rallied Monday on corporate takeover news, while the pound sank to a two-year dollar low on festering Brexit concerns, dealers said.

In midday deals, the British capital's FTSE 100 benchmark index of major blue-chip companies jumped 1.5 percent, in contrast with a more subdued performance in the eurozone.

Britain's Just Eat and Takeaway.com of the Netherlands unveiled a plan to join forces to create a heavyweight in the rapidly-growing food delivery sector with around $8 billion in annual sales.

The combination of the two firms would create a delivery platform worth around $11 billion capable of competing against Britain-based Deliveroo and Uber Eats of the United States with a strong presence in Britain, Canada, Germany and the Netherlands.

The news sent Just Eat's share price rocketing by almost a third to 822.20 pence, topping the FTSE 100 risers board.

The second biggest gainer was the London Stock Exchange after it confirmed talks over a vast $27-billion takeover of US financial data provider Refinitiv, in a move that would place it in direct competition with Bloomberg.

The takeover, which is worth the equivalent of 24 billion euros and marks a major switch in strategy under LSE CEO David Schwimmer, sent shares briefly spiking to a record.

The stock later pared gains to stand at 6,520 pence, up about 15 percent from Friday.

The FTSE was also buoyed by the weak pound, which hands a major boost to exporters.

"The FTSE is powering ahead ... on merger and takeover news, shrugging off a weak session in Asia where the start of the Sino-US trade talks in Shanghai dominated trading sentiment," said City Index anlayst Fiona Cincotta.

"Other European indices were close to flat or in the case of the CAC in slightly negative territory as a decline in carmaker shares dragged the index lower.

"The lead faller was ... Peugeot after the company said it is considering closing down its Ellesmere Port plant in the UK if the plant becomes unprofitable because of Brexit."

Chief executive Carlos Tavares told the Financial Times that he would be forced to shut down the facility in northwest England if market conditions turned "bad" as a result of Britain's EU departure.

PSA shares sank 2.4 percent to 21.96 euros in Paris, topping the fallers board.

- Pound pummelled -

In foreign exchange activity, the pound tumbled to $1.2301 -- last seen in March 2017 -- on festering fears that Britain could crash out of the European Union with no deal in place at the end of October.

Prime Minister Boris Johnson has vowed to lead Britain out of the EU on October 31 even if this means doing so without a divorce agreement.

"The pound has gotten off on the wrong foot at the start of the new week," said XTB analyst David Cheetham.

"Brexit continues to be the dominant theme with a noticeable harshening of the rhetoric in recent days raising concerns amongst traders."

Asia markets were mostly down Monday, with investors cautious ahead of US-China talks in Shanghai this week and amid more civil unrest in Hong Kong.

Two-day discussions begin on Tuesday with a Washington delegation led by White House Trade Representative Robert Lighthizer.

Hong Kong was among the biggest downward movers on Tuesday with the Hang Seng falling more than two percent after a fresh round of violent protests over the weekend, before paring losses.

- Key figures around 1115 GMT -

London - FTSE 100: UP 1.5 percent at 7,663.25 points

Frankfurt - DAX 30: UP 0.1 percent at 12,430.59

Paris - CAC 40: FLAT at 5,608.60

EURO STOXX 50: UP 0.1 percent at 3,529.53

Pound/dollar: DOWN at $1.2311 from $1.2384 at 2100 GMT

Euro/pound: UP at 90.31 pence from 89.86 pence

Euro/dollar: DOWN at $1.1118 from $1.1128

Dollar/yen: DOWN at 108.63 yen from 108.68 yen

Tokyo - Nikkei 225: DOWN 0.2 percent at 21,616.80 (close)

Hong Kong - Hang Seng: DOWN 1.0 percent at 28,106.41 (close)

Shanghai - Composite: DOWN 0.2 percent at 2,941.99 (close)

New York - Dow: UP 0.2 percent at 27,192.45 (close)

Brent North Sea crude: DOWN 0.4 percent at $63.23 per barrel

West Texas Intermediate: DOWN 0.2 percent at $56.06

burs-rfj/rl

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting