MARKET REPORT: European stocks rally on Ukraine ceasefire hopes

European stock markets recouped some losses as hopes of a diplomatic breakthrough in Ukraine offset worries of a resurgence of Covid-19 in China.

In London, the FTSE 100 rose 0.5%, or 37.83 points, to 7193.47 while the FTSE 250 gained 1.3%, or 264.64 points, to 20471.25 as talks of peace between Russia and Ukraine have resumed.

Both sides have reported progress, although the details of any potential deal are still unclear.

Lockdown threat: China’s Covid outbreaks sent Hong Kong’s Hang Seng index down nearly 5%, while the Shanghai Composite fell 2.6%

Optimism about a possible ceasefire also helped push the German, French and Italian markets higher with Frankfurt up 2.2%, Paris 1.8% and Milan 1.7%.

But Michael Hewson, chief market analyst at CMC Markets UK, said optimism in Ukrainian markets could be misplaced.

“There is certainly an element of hope for the best, which seems to run counter to the reality on the ground and that for a lasting end to hostilities to take place, one side or the other will have to back down in a way quite significant,’ he said.

Asian markets fell sharply as the Chinese city of Shenzhen returned to lockdown following a rise in Covid cases. The shutdown sent Hong Kong’s Hang Seng index down almost 5%, while the Shanghai Composite fell 2.6%.

“Shenzhen’s closure could have negative effects beyond the Chinese economy. It is known as “the factory of the world” thanks to its concentration of electronic manufacturing.

Any prolonged disruption to operations could cause another crisis in the global supply chain,” said Russ Mould, Chief Investment Officer of AJ Bell.

China-focused investment trusts in London were hit, with JP Morgan China Growth & Income, which has large stakes in Shenzhen-based tech giant Tencent and Chinese shopping platform Meituan, falling 3 .9%, or 13.5p, to 333.5p while Fidelity China Special Situations fell 7.1%, or 17.5p to 228p.

Stock Watch – Tracsis

Tracsis rose after picking up an American rival.

The company, which provides data analytics software to the rail industry, has bought New York-based RailComm in a deal worth up to £10.9 million in cash.

RailComm provides control systems for rail operators and ports served by railways and other industrial areas.

Tracsis expected the purchase to provide it with direct access to “a significant number” of customers in North America.

Shares jumped 2.8%, or 25p, to 925p.

Miners were also in the red as commodity prices eased after recent surges. Anglo American fell 5.2%, or 201.5p, to 3,968.5p while Glencore fell 5.8%, or 29.75p, to 481.55p and Rio Tinto lost 1.8%, or 104p , at 5783p.

Homebuilders were among the highest following reports that negotiations between industry and government over cladding costs are expected to result in an agreement as early as next week, the full bill to remove cladding from towers medium size expected to be under £1bn, well below previous estimates of £4bn.

The news sent Persimmon shares up 5.5%, or 120p, to 2,292p. Berkeley jumped 3.4%, or 129p, to 3,940p, Barratt added 2.9%, or 16p, to 561.2p and Taylor Wimpey gained 3.9%, or 5.3p, to 139.7p.

Pharmaceutical giant AstraZeneca rose 1.3%, or 121p, to 9396p after its drug Lynparza won approval from US regulators to treat breast cancer.

The firm also announced that the US Food and Drug Administration has requested more clinical data for its Fasenra treatment for chronic rhinosinusitis with nasal polyps, a condition that can cause sinus pain and loss of smell.

Heat treatment specialist Bodycote rose 2.3%, or 15p, to 675p after returning to profit.

It reported a pre-tax profit for 2021 of £77.5m, compared with a loss of £1.5m the previous year as demand from its industrial markets rebounded from the pandemic. Revenue rose 3% to £615.8m.

Egg-free cake maker Cake Box has announced that co-founder and chief financial officer Pardip Dass will step down at the end of March after more than a decade with the company.

His exit came after the company admitted in January that there had been “inconsistencies” in its accounts, sending its share price plummeting. The stock jumped 15.9%, or 31.5p, to 230p.

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