ADVFN Morning London Market Report: Monday 19 June 2017

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London open: Stocks push higher as Brexit talks begin

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London stocks rose in early trade on Monday, taking their cue from an upbeat Asian session and with Brexit negotiations due to kick off in Brussels later.

At 0830 BST, the FTSE 100 was up 0.8% to 7,521.58, while the pound was flat against the euro at 1.1418 and versus the pound at 1.2779 as the European Union’s chief negotiator Michel Barnier and UK Brexit secretary David Davis were due to meet in the Belgian capital at 1000 BST.

Neil Wilson, senior market analyst at ETX Capital, pointed out that Prime Minister Theresa May’s Conservative party is pushing for a hard deal – an exit from the single market and customs union – but said that this carries a large degree of risk.

“As the larger partner, the EU holds the trump cards. The pound would gain some support above the $1.25 level but a lot would depend on the scale of any deal.”

Wilson said a “very soft” Norway-style deal would be market friendly but unpalatable to the 52% and easy to argue against. “It would undoubtedly be positive for sterling and could see GBPUSD regain levels seen before the referendum, but looks highly unlikely at present.”

Meanwhile, a “softish” deal, which would involve remaining in the customers union, “could be an option that both sides can just about stomach”.

“It would represent a major shift in the government negotiating position for this to be on the table – a new government perhaps? Domestic political uncertainty means this scenario remains a possibility, however.”

Investors will also be waking up to news that one person was killed and several injured after a man drove into pedestrians near London’s Finsbury Park Mosque in the early hours of Monday morning. The driver of the van, a 48-year old man, has been arrested and the incident is being treated as a potential terrorist attack.

Over in France, President Emmanuel Macron’s party won a clear parliamentary majority, weeks after his own presidential victory. His La Republique en Marche won more than 300 seats in the 577-seat National Assembly. This was fewer than some polls predicted, however.

In corporate news, Barclays advanced as the Serious Fraud Office was expected to announce as soon as Tuesday whether it has decided to bring criminal charges against some of its bankers in relation to its emergency fundraising at the height of the financial crisis.

Workspace ticked up after announcing the exchange of contracts for the disposal of the third and final phase of the mixed-use redevelopment of Bow Enterprise Park, London E3 on Monday.

Outsourcer Capita rallied as Jefferies upgraded its stance on the stock to ‘buy’ from ‘hold’ saying the risk/reward is slowly improving.

Ocado was also in the back amid speculation it could be a takeover target in the wake of Amazon’s agreement to buy Whole Foods last week.

Cairn Energy was on the back foot after saying it is seeking $1bn in damages from an international arbitration case in The Hague over its long-running tax dispute with the Indian government, on top of the $104m (£81.4m) that Indian tax authorities signed off last week.

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