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LONDON MARKET MIDDAY: Miners and M&A keep London stocks in green

European markets on Tuesday were shaking off a real pay slump in the UK and deteriorating economic sentiment in Germany, with the FTSE 100 lifted by a weaker pound and a strong showing from its heavyweight mining contingent.

The FTSE 100 was up 39.51 points, or 0.5%, at 7,548.66 midday Tuesday. The FTSE 250 index was up 22.15 points, or 0.1%, at 20,404.91. The AIM All-Share index was down 1.30 points, however, or 0.1% lower, at 932.81.

The Cboe UK 100 index was up 0.5% at 754.02. The Cboe 250 was up 0.2% at 17,693.50. The Cboe Small Companies was down 0.1% at 14,462.86.

In Paris, the CAC 40 was up 0.3%, while the DAX 40 in Frankfurt climbed 0.6%.

The overseas earnings-heavy FTSE 100 got a boost as the pound weakened following data which showed UK wages continue to lag soaring inflation.

The pound was quoted at $1.2021 midday Tuesday in London, down from $1.2075 late Monday.

In a monthly labour market update, figures showed the UK unemployment rate was steady at 3.8% in the three months to June, though a fall in real wages stole the headlines.

According to the Office for National Statistics, regular UK wages fell 3.0% year-on-year on an inflation-adjusted basis, a record slump in real pay. Including bonuses, real pay fell 2.5%.

Unadjusted wage growth figures came in above expectations. Regular pay, so excluding bonuses, was 4.7% higher in the three months to June. The figure topped FXStreet cited consensus of 4.5% growth. Including bonuses, wage growth was 5.1% year-on-year, beating a forecast of 4.5% growth.

‘We think the data supports a 50bp Bank of England hike on 15 September (45bp currently priced). In all, EUR/GBP can soften a little, but a stronger dollar means that Cable can go sub $1.20 again,’ said ING.

The euro stood at $1.0127 at midday in London on Tuesday, down from $1.0184 after markets closed on Monday.

The single currency was on the back foot after a survey found economic sentiment in Germany took a hit in August, with inflation and rising energy costs weighing on expectations.

According to the latest Zew survey, the economic outlook for Germany fell to negative 55.3 points in August, from negative 53.8 in July.

Against the yen, the dollar was trading at JP¥134.11, up sharply from JP¥133.07. Focus will turn to the Federal Reserve on Wednesday, when the US central bank releases minutes from its latest meeting.

Though the Fed earlier this month voted for its second straight 75-basis-point hike, investors saw subsequent comments from Chair Jerome Powell as dovish.

‘Despite the softer-than-expected July CPI report, several Fed officials maintained their policy outlook and continued to push back on the dovish interpretation of the July FOMC meeting,’ analysts at Deutsche Bank commented.

‘Although there have been some tentative positive developments on the inflation front, progress has been less clear on correcting supply-demand imbalances in the labour market and ensuring inflation expectations remain well anchored.’

US equities are called lower on Tuesday. The Dow Jones Industrial Average and S&P 500 are called down 0.2%, while the Nasdaq Composite is seen opening 0.3% lower.

In London, miners were among the FTSE 100's top performers. Glencore rose 4.1%, Anglo American added 2.8% and Rio Tinto moved 2.6% higher.

The trio were boosted by strong annual results for peer BHP, with former FTSE 100 constituent up 4.2% in midday trade.

In the year to June 30, BHP's revenue rose 14% to $65.10 billion from $56.92 billion. Pretax profit was 36% higher at $33.14 billion from $24.29 billion. It raised its dividend by 8.0% to $3.25 per share from $3.01.

BHP left London's flagship blue-chip benchmark earlier this year after a unification under its Australian parent company. The change moved its primary listing to Sydney's Australian Securities Exchange, meaning it was no longer eligible for FTSE index inclusion in London.

Darktrace topped the FTSE 250 benchmark, rising 23%. The cybersecurity company late Monday confirmed that it is in early stages of discussions with private equity company Thoma Bravo on a possible cash offer for the Cambridge-based firm.

Thoma Bravo has until September 12 to either make a firm offer for Darktrace, or state that it will not be making an offer.

Ted Baker jumped 17% to 108.85 pence, after it agreed to a takeover. Ted Baker backed a £211 million offer, or 110p per share, from Reebok owner Authentic Brands Group.

Ted Baker has been in a formal sales process since April, and initially had said that Sycamore Partners Management, a New York-based private equity firm whose approaches had triggered the move, was participating. However, Ted Baker later confirmed that Sycamore was no longer participating in the sales process.

In May, Ted Baker said it had progressed talks with a ‘preferred counterparty’ into the due diligence phase, however the unnamed party had bowed out of a potential deal in June.

A takeover will spell the end of a roughly 25-year stint as a listed firm. That period in recent years has been marred by a loss of investor confidence in the stock, amid management changes, profit cautions and a scandal involving its former chief executive.

It was hit by complaints of inappropriate hugging made against then-CEO Ray Kelvin in 2019. It then went through three CEOs within a year, as well as several profit warnings.

AJ Bell analyst Danni Hewson commented: ‘It's been a torrid time for fashion retailer Ted Baker but beneath all the scandals and sorry trading performance there is clearly some value remaining in the brand.’

Watches of Switzerland rose 4.0%, as it reported a first quarter revenue climb, defying a cost of living-induced retail malaise.

The Rolex watch sellersaid revenue in the first quarter ended July 31 climbed 31% year-on-year to £391 million from £297 million.

Watches of Switzerland affirmed guidance. It expects annual revenue between £1.45 billion and £1.50 billion, up from £1.24 billion in financial 2024.

Guidance assumes a ‘potentially more challenging trading environment in the second half’, however.

Tremor International slumped 19%. The digital advertising firm reported an 18% drop in pretax profit to $28.8 million six months ended June 30, from $35.1 million a year earlier.

Still to come on Tuesday's economic calendar are US housing starts and building permits data at 1330 BST.

Gold stood at $1,775.58 an ounce midday Tuesday, down slightly from $1,778.71 at the London equities close on Monday. Brent oil was quoted at $93.75 a barrel, down from $94.22.

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