London stock market kicks off 2017 with record high

 03 Jan 2017 - 14:42

London stock market kicks off 2017 with record high
People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo.

AFP

London: European and Asian stock markets mostly rose Tuesday, with London reaching a new high early into its first session of 2017.

London's FTSE 100 reached a historic peak at 7,205.21 points in morning deals, extending a record run seen in the final week of 2016.

The Paris CAC 40 meanwhile struck a 13-month high above 4,900 points.

"2017 has kicked off in fine style for the FTSE 100, which broke to a new record high at the open," said Joshua Mahony, market analyst at IG trading group. 

The FTSE remained in positive territory approaching midday as a survey showed UK manufacturing reaching a 30-month high in December.

The Markit/CIPS manufacturing purchasing managers' index (PMI) climbed to 56.1 in December after easing to 53.6 in November.

It "provides further evidence that the sector's post-referendum weakness will prove short-lived", said Capital Economics analyst Ruth Gregory.

Since Britain's vote in favour of Brexit, London's FTSE 100 blue-chip index has soared thanks in large part to a weaker pound, even as the economy shrugs off the impact of the country's impending divorce from the European Union.

Elsewhere Tuesday, most Asian markets were higher on their first trading day of the year.

Chinese stocks finished solidly higher after an independent research firm showed manufacturing activity expanded in December at its quickest pace in nearly four years, a sign of improving health for the world's second-largest economy.

Markets in Japan were closed for the final day of an extended New Year holiday. 

On currency markets, the dollar advanced and was projected to continue its climb over the longer term, on expectations of more US interest rate rises this year and Donald Trump's inauguration as US president.

"The US dollar should remain strong in 2017. Growth and inflation in the US will be the strongest amongst the G3 economies (US, Japan and the EU)," Singapore's DBS Bank said in a note.

"We expect the Fed to hike four times this year whilst the eurozone and Japan maintain their quantitative easing (stimulus) policies," it added.

Also Tuesday, oil prices struck fresh 18-month highs as an agreement by major producers to cut output took effect.

OPEC members led by Saudi Arabia and non-OPEC producers like Russia agreed late last year to slash output to try and shore up prices weighed down by an oversupply since mid-2014.

On the corporate front, the London Stock Exchange said Tuesday it has agreed to offload the French arm of clearing house LCH to European rival Euronext as it seeks a merger with Deutsche Boerse.

LSE Group said a cash deal worth 510 million euros ($534 million) had been struck with Euronext, adding in a statement that the proposed sale "would be subject to review and approval by the European Commission in connection with the recommended merger of LSEG and Deutsche Boerse".