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LONDON MARKET CLOSE: Oil lifts FTSE 100; Grafton drops in FTSE 250

Stocks in London ended mixed on Monday in a light trading session as US markets were closed for Independence Day, with oil stocks lifting the FTSE 100 to the green on higher Brent prices.

The FTSE 100 index closed up 64.00 points, or 0.9%, at 7,232.65. The FTSE 250 index closed down 44.03 points, or 0.2%, at 18,592.95. The AIM All-Share index closed up 0.19 of a point at 875.02.

The Cboe UK 100 index closed up 1.2% at 722.11. The Cboe 250 ended down 0.2% at 16,185.36. The Cboe Small Companies finished 0.3% higher at 13,290.11.

In Paris the CAC 40 closed up 0.4%, while the DAX 40 in Frankfurt ended down 0.3%.

In the FTSE 100, energy stocks ended among the best performers, tracking spot oil prices higher. BP closed up 4.8%, Shell up 4.3% and Harbour Energy up 5.2%.

‘Oil supplies have been watched closely in recent weeks amid concerns about a slowdown in the global economy. Fundamentally supplies continue to be tight and there is still enough economic activity to stop oil prices slumping. However, lingering recession fears could act as a ceiling on the oil price so we might not see the black stuff race ahead in value too much from current levels,’ said Russ Mould of AJ Bell.

Brent oil was quoted at $113.66 a barrel at the equities close, up sharply from $110.84 at the close Friday.

In the FTSE 250, Pets At Home closed down 7.8% after RBC downgraded the pet products retailer to 'underperform' from 'sector perform'.

Grafton slumped 7.7% after the Selco owner said Gavin Slark plans to step down as chief executive, after 11 years at the helm. He will stay on as the builders merchant's boss until the end of the year, ‘in line with his service agreement’.

Elsewhere, AO World slumped 19% after a press report at the weekend pertaining to its credit cover caused the online electrical appliance retailer's stock to drop sharply.

The Sunday Times reported that Atradius, a credit insurer, cut its credit cover for the online retailer's suppliers. Credit cover is crucial aspect of the retail supply chain. It provides cover for firms should customers not pay debts in time or at all.

AO confirmed in a statement on Monday that it was aware that one of the third-party credit insurers which provides credit insurance to some of its suppliers had rebased their cover in May with respect to AO, reflecting post-Covid sales levels.

This, the company explained, was a reduction from the heightened levels that had been in place and required through the pandemic.

AO said that, to date, this rebased cover has had no effect on its liquidity position, which remains in-line with the board's expectations for 2023, it added.

The company continued that progress in regard to the closure of its German operations has been ‘encouraging’, with total cash costs of closure now expected to be towards the lower end of its original estimates of nil to £15 million.

AO added it continues to have full access to its £80 million revolving credit facility and is still considering and implementing a number of ongoing initiatives and further actions to strengthen its balance sheet.

The pound was quoted at $1.2114 at the London equities close, up from $1.2034 at the close Friday.

The euro stood at $1.0430 at the European equities close, up from $1.0406 after producer price inflation data from the continent.

Eurozone factory gate inflation eased slightly in May, figures showed. According to Eurostat, the producer price index rose 36.3% annually in May, easing from 37.2% in April.

The figure came in slightly below FXStreet-cited consensus of 36.7%.

On a monthly basis, producer prices rose by 0.7% in May, cooling off from 1.2% in April. This undershot the consensus estimate of 1.0% for the monthly change.

Against the yen, the dollar was trading at JP¥135.72, up from JP¥135.19 late Monday.

Gold stood at $1,808.30 an ounce at the London equities close, firm against $1,806.73 late Friday.

Financial markets in the US were closed on Monday for Independence Day.

The economic calendar on Tuesday has a slew of services PMI readings from China, France, Germany, the eurozone and UK. On the central banking front, the Reserve Bank of Australia announces its latest interest rate decision overnight.

The UK corporate calendar on Tuesday has first quarter results from supermarket chain J Sainsbury and annual results from fashion retailer Quiz.

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