MARKET REPORT: European stocks rally on Ukraine ceasefire hopes

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

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

Both sides flagged progress, although the details of any potential agreement are still unclear.

Lockdown threat: Outbreaks of Covid in China sent Hong Kong’s Hang Seng index down nearly 5%, while the Shanghai Composite slumped 2.6%

Optimism over a possible ceasefire also helped to push German, French and Italian markets higher with Frankfurt up 2.2 per cent, Paris 1.8 per cent and Milan 1.7 per cent.

But Michael Hewson, chief market analyst at CMC Markets UK, said optimism in the markets over Ukraine may be misplaced.

‘There is certainly an element of hoping for the best, which seems to fly in the face of the reality on the ground and that for a sustained end to hostilities to take place, one side or the other will have to back down quite significantly,’ he said. 

Asian markets fell sharply as the Chinese city of Shenzhen headed back into lockdown following a rise in Covid cases. The shutdown sent Hong Kong’s Hang Seng index down nearly 5 per cent, while the Shanghai Composite slumped 2.6 per cent.

‘Shenzhen going into lockdown could have negative effects beyond China’s economy. It is known as “the world’s factory” thanks to its concentration of electronics manufacturing. 

Any prolonged disruption to operations could cause yet another global supply chain crunch,’ said AJ Bell investment director Russ Mould.

Chinese-focused investment trusts in London were hit, with JP Morgan China Growth & Income, which holds large stakes in Shenzhen-based tech giant Tencent and Chinese shopping platform Meituan, sinking 3.9 per cent, or 13.5p, to 333.5p while Fidelity China Special Situations dropped 7.1 per cent, or 17.5p to 228p.

Stock Watch – Tracsis

Tracsis moved higher after snapping up a US rival.

The firm, which provides data analysis software to the railway industry, bought New York-based RailComm in a deal worth up to £10.9million in cash.

RailComm provides control systems for rail operators and railway-served ports and other industrial areas. 

Tracsis expected the purchase to provide it with direct access to ‘a significant number’ of clients in North America.

Shares jumped 2.8 per cent, or 25p, to 925p.

Miners were also in the red as commodity prices eased following recent surges. Anglo American lost 5.2 per cent, or 201.5p, to 3968.5p while Glencore dropped 5.8 per cent, or 29.75p, to 481.55p and Rio Tinto shed 1.8 per cent, or 104p, to 5783p.

Housebuilders were among the top risers following reports that negotiations between the industry and the Government over cladding costs were expected to yield an agreement as soon as next week, with the total bill to remove cladding from medium-rise tower blocks predicted to be less than £1billion, much lower than previous estimates of £4billion.

The news sent shares in Persimmon up 5.5 per cent, or 120p, to 2292p. Berkeley jumped 3.4 per cent, or 129p, to 3940p, Barratt added 2.9 per cent, or 16p, to 561.2p and Taylor Wimpey gained 3.9 per cent, or 5.3p, to 139.7p. 

Pharma giant AstraZeneca was up 1.3 per cent, or 121p, at 9396p after its Lynparza drug secured approval from US regulators to treat breast cancer. 

The firm also announced that the US Food and Drug Administration had 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 per cent, or 15p, to 675p after swinging back into profit. 

It reported a pre-tax profit for 2021 of £77.5million compared to a £1.5million loss the previous year as demand from its industrial markets bounced back from the pandemic. Revenues were up 3 per cent at £615.8million.

Egg-free cake maker Cake Box announced that its co-founder and chief financial officer Pardip Dass would be stepping down at the end of March after more than ten years at the firm. 

His exit came after the firm admitted in January that there had been ‘inconsistencies’ in its accounts, sending its share price tumbling. The stock surged 15.9 per cent, or 31.5p, to 230p.