January 9, 2019 / 9:19 AM / 2 months ago

UK shares jump on trade hope; Taylor Wimpey triggers house-builder rally

(Reuters) - U.K. shares jumped to their highest in more than a month on Wednesday, joining a broad global rally on hopes of an end to the U.S.-Sino trade row and as a positive update from Taylor Wimpey gave a much-needed boost to house-builders.

Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls

London's blue-chip bourse .FTSE ended the day 0.7 percent higher after hitting its highest since Dec. 5 and the mid-cap index .FTMC rallied 1.3 percent to levels not seen since Dec. 4.

European and Asian markets rose after talks in Beijing with U.S. officials concluded earlier on Wednesday as the world’s two largest economies sought a truce in their longstanding row.

China pledged to purchase a substantial amount of agricultural, energy and manufactured goods and services from the United States, the U.S. Trade Representative’s office said in a statement that gave few details on specific outcomes.

Spreadex analyst Connor Campbell said the statement was light on evidence that much actual progress had been made during the three days of trade talks in Beijing.

“The markets had perhaps put a lot of pressure on these talks to solve a geopolitical and economic problem that requires significantly more than a 72-hour get-together to untangle,” the analyst said.

Uncertainty over London’s divorce from the European Union also deepened ahead of next week’s parliamentary vote on the draft deal, while figures showed domestic productivity growth slowed to a two-year low during the three months to last September.

British Prime Minister Theresa May suffered an early defeat to her Brexit plans, when parliament demanded the government come up with a plan B within days if she loses a vote on her deal to leave EU.

That was yet another setback after her government suffered a defeat in parliament on Tuesday when lawmakers who oppose leaving without a deal won a vote on creating a new obstacle to a no-deal Brexit.

HOUSE-BUILDERS LEAD THE WAY

Still, house-builders, one of the most battered sectors amid concerns about the slowing economy due to Brexit - led the gains on Wednesday after Taylor Wimpey (TW.L) maintained its 2018 results forecast and predicted solid 2019 sales.

Its shares advanced 6.2 percent and topped the blue-chip leader board in their best day since July 2016, taking peers Berkeley (BKGH.L), Persimmon (PSN.L) and Barratt (BDEV.L) with them.

Sainsbury’s (SBRY.L) recouped initial losses to close 2.3 percent higher after its chief executive reiterated his confidence that its Asda takeover deal will be cleared.

It had earlier slipped almost 3 percent on a disappointing Christmas quarter update.

Vodafone (VOD.L) was the biggest drag on FTSE 100 with a near 2 percent fall that Deutsche Bank analyst Robert Grindle said could be because investors chose more cyclical sectors over defensive stocks in light of trade talk optimism.

Among mid-caps, fashion retailer Ted Baker (TED.L) stole the show with a 31.2 percent surge on robust holiday period sales and an HSBC upgrade that helped it bag its biggest intraday gain since floating in 1997.

Hargreaves Lansdown analyst Laith Khalaf said the update helped allay concerns that news around CEO Ray Kelvin’s alleged conduct could have impacted the Christmas period.

Wednesday’s gains helped shares recoup all losses since the company said it would investigate claims against Kelvin in early December.

IT infrastructure and service provider Softcat (SCTS.L) jumped 17.8 percent after an unscheduled trading update to its best day on record.

GRAPHIC: UK housebuilders since BRXT vote - tmsnrt.rs/2RGJpEg

Reporting by Muvija M and Shashwat Awasthi in Bengaluru; editing by Josephine Mason and Andrew Cawthorne

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