China stimulus hopes; Cairn Energy; Pru UK
Tue close: Shares in London maintained their strong start to the day, following a rise in Asia on hopes that new data showing slower growth in China will encourage the government introduce new stimulus measures.
China’s economy grew 6.8% in the fourth quarter over the same period a year earlier, but this was the slowest growth since 2009. It grew at 6.9% over the year, the slowest for 25 years. The figures confirmed expectations which have been at the root of the slide in world markets.
The FTSE 100 surged above 100 points and closed up 96.9 (1.7%) at 5,876.8. In earlier trade the Dow Jones industrial average was up 109.51 points, or 0.68%, at 16,097.59. The S&P 500 rose 15.43 points, or 0.82%, at 1,895.76 and the Nasdaq Composite index by 58.47 points, or 1.3%, at 4,546.89.
In commodities, Brent crude was off its 13-year low of $27.67 and rose 1.5% to $29 a barrel this morning.
Edinburgh oil explorer Cairn Energy confirmed in an interim management statement that legal proceedings have begun against the government of India to resolve a retrospective tax dispute. A panel of three international arbitrators has been appointed under the terms of the UK-India Investment Treaty.
Cairn said it has “a high level of confidence in its case under the UK-India Investment Treaty”, and as well as resolving the dispute, it will seek $1 billion damages equal to the value of Cairn’s residual shareholding in Cairn India.
The company said it remains fully funded from existing financial resources to deliver its exploration and appraisal programme, as well as to take its North Sea developments through to free cashflow generation in 2017.
It was upbeat on progress at its Senegal well.
Prudential has appointed John Foley as chief executive of Prudential UK & Europe and as an executive director. He was made interim chief executive in October, when former Standard Life CFO Jackie Hunt resigned just months after Mike Wells took over as group chief executive from Tidjane Thiam.
Prudential has seen its shares fall 20% from year high reached last April. Ahead of an investor day it said its capital ratio, required under new European rules, beat expectations.
Aberdeen Asset Management was among the top risers, up 2.3%.