LONDON MARKETS: FTSE 100 Ends Higher, Rising From 6-week Low As Ocado, Tobacco Firms Rally

By Carla Mozee and Sara Sjolin, MarketWatch

Ocado, tobacco stocks rise after analyst comments

U.K. stocks rose on Tuesday, with tobacco companies among biggest gainers after a positive broker note, helping London's blue-chip index bounce off a six-week low that it reached as trade tensions between the U.S. and China escalated.

How markets are moving

The FTSE 100 index gained 0.3% to close at 7,627.40, partly recovering from a 0.4% loss on Tuesday.

The pound traded at $1.3206, up from $1.3173 late Tuesday in New York.

What's driving markets

Like Asian and continental European equity markets (http://www.marketwatch.com/story/european-stocks-stage-recovery-but-us-china-trade-tensions-remain-2018-06-20), U.K. stocks were recovering from Tuesday's slide, which came as investors fled on worries about the deteriorating U.S.-China trade relationship.

In Washington, the White House accused China of waging a systematic campaign of "economic aggression" in a report released Tuesday (http://www.marketwatch.com/story/navarro-report-blasts-china-for-systematic-economic-aggression-2018-06-19). That followed U.S. President Donald Trump's threat to impose more tariffs on Chinese goods, adding up to levies on $450 billion in imports, after Beijing threatened to retaliate against a first round of U.S. tariffs (http://www.marketwatch.com/story/china-threatens-further-tariffs-on-us-products-as-trade-conflict-escalates-2018-06-19).

But the trade-war concerns seemed to be subsiding somewhat after the governor of the People's Bank of China, Yi Gang, reportedly appealed (http://www.scmp.com/business/markets/article/2151558/hong-kong-stocks-steady-early-trading-even-dow-wipes-out-gains-made) for investors "not to lose confidence" in China's "strong economic fundamentals." Fears that Beijing would use yuan devaluation as a weapon in the trade hostilities eased, too, after China's central bank set its reference rate for the currency (http://www.marketwatch.com/story/yuan-move-by-chinas-central-bank-shows-no-effort-to-devalue-amid-trade-spat-2018-06-20) at its lowest since January.

Read:China can't match Trump in a tariff fight, but it does have other weapons (http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)

Also, lawmakers in the House of Commons voted against an amendment to the Brexit bill that would have given parliament a "meaningful vote" on the final divorce agreement. Wednesday's vote was seen as an important victory for U.K. Prime Minister Theresa May after the House of Lords on Monday voted in favor of giving parliament more say on the final deal.

What strategists are saying

"Given the absence of any major news on the trade front, the trigger for the shift in sentiment appears to have been some market-friendly signals from the People's Bank of China. The central bank said it is prepared for outside shocks and that China has room to face all sorts of trade frictions, fueling speculation for a loosening of policy should the trade outlook deteriorate," said Marios Hadjikyriacos, investment analyst at XM.com.

"Ironically, any further easing from the PBOC could lead to a weaker yuan, thereby potentially exacerbating the U.S.-China trade deficit that the U.S. administration is so desperately trying to reduce," he said in a note.

Stock movers

Shares of British American Tobacco PLC (BATS.LN) (BATS.LN) gained 2.4% and Imperial Brands PLC (IMBBY) (IMBBY) added 3.2% after Liberum started coverage of both tobacco firms with buy ratings.

Ocado PLC shares (OCDO.LN) rallied 5.6%. Peel Hunt analysts said in a note that they believe the online grocery and technology company "has potential to become the 'standard' platform for retail logistics across all sectors as the operating system of retail."

Berkeley Group Holdings PLC (BKG.LN) stumbled 5.9% after the home builder said it expects profit to be around 30% lower in fiscal 2019 (http://www.marketwatch.com/story/berkeley-group-foresees-lower-profit-2018-06-20) and that pretax profit in fiscal 2018 represented a peak. Shares of other home builders also lost ground, with Barratt Developments PLC (BDEV.LN) down 1.5% and Persimmon PLC (PSN.LN) ending 0.6% lower.

(END) Dow Jones Newswires

June 20, 2018 12:02 ET (16:02 GMT)

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