FTSE 100 closes at fresh two-month high on LSE rally, as China's factory activity contracts again

Equipment rental group Ashtead suffered its steepest daily loss in five years yesterday after it slashed its capital expenditure for next year, sparking fears of a slowdown in the US. 

The FTSE 100 group posted rental revenue growth of 17pc in the three months ended January 31, while pre-tax profits rose by 20pc to £139.1m.

Despite a robust set of third-quarter results, it was Ashtead’s move to reduce its capital expenditure guidance to between £700m and £1bn for 2017, compared with this year’s guidance of £1.2bn, that spooked investors.

Andrew Farnell, of Morgan Stanley, said the guidance reflects “an element of caution”. 

Trading has been extremely volatile since the start of the year after read-across from its US peer United Rentals caused Ashtead’s shares to plunge by more than 20pc.

It has issued a cautious outlook for the current year due to persistent oil price volatility and weakness in Canada.

However, the stock has since recouped these losses.  Ashtead’s exposure to oil and gas has fallen from 7pc of revenues last year to just 1pc in the past year, and although the bulk of the group’s profits (96pc) come from its US division, Sunbelt Rentals, Ashtead expects its full-year results to be in line with expectations. 

In a bid to shore up confidence in the business, boss Geoff Drabble snapped up around £250,000-worth of shares yesterday. The shares closed down 81.5p, or 8.8pc, at 842.5p. 

On the broader market, the FTSE 100 touched a fresh two-month high, buoyed by a strong performance from the London Stock Exchange Group. 

Shares in the LSE surged to record highs - up 7.2pc to £28.70 - after Intercontinental Exchange confirmed it was considering making a rival bid for the group. The announcement comes a week after the LSE revealed it was in “detailed discussions” about a merger with Deutsche Boerse. 

The LSE rally lifted the blue-chip index by 55.79 points, or 0.92pc, to 6,152.88.  Meanwhile, mining stocks had a mixed trading session.

Glencoreposted a 32pc fall in adjusted earnings before interest, tax, depreciation and amortisation to $8.7bn, and announced plans to step up its debt reduction plan.

The trading and mining group now expects to slash net debt to $17bn by the end of the year. Given the circumstances, Nick Hatch, of Canaccord Genuity, said: “This was a reasonable set of numbers.” Nonetheless, the FTSE 100 stock slipped 2.1pc to 130.5p. 

Antofagasta fell 0.7pc to 490.4p, while Rio Tinto edged 1.9pc higher to £19.40 after it enjoyed a rating upgrade. RBC Capital Markets hiked its rating to “sector perform” due to “a more balanced outlook” for the group. 

Tyler Broda, of RBC, said: “Rio’s proactive change to the dividend policy has substantially increased financial flexibility.” 

Separately, Rio also offloaded its 40pc interest in the Bengalla coal joint venture in Australia to New Hope Corporation for $620m.

Meanwhile, shares in Anglo American inched up 2.3pc to 491.3p and BHP Billiton added 1.7pc to 740.4p. 

Despite the recent demand for precious metals amid the recent market turmoil, gold and silver producer Fresnillo recorded a 15pc slump in pre-tax profits for the year, sending its shares 6.2pc south to 938p. 

Elsewhere, Barclays was among the biggest laggards, down 8.1pc to 158.1p,  after its full-year profits fell short of expectations and it announced plans to sell its African bank.

Gary Greenwood, of Shore Capital, described the update as “pretty disappointing”. “We suspect the market will not be too impressed by the changes to guidance or the measures being taken to improve performance; cost cutting does not seem to be aggressive enough, to us,” he said.

On the mid-cap index, baker Greggs posted its biggest-ever daily gain, up 15.6pc to £11.96, after its pre-tax profits jumped 25.4pc to £73m and announced plans to invest £100m in restructuring. 

Rotork also found itself among the top FTSE 250 risers after full-year results came in in-line with September’s forecast. Full-year operating profit slumped 20.3pc to £125.3m.

Although the results were more resilient than previously feared, analysts in the City remained cautious due to the group’s 53pc revenue exposure to oil and gas. Nevertheless, the mid-cap stock soared 19.2p, or 12pc, to 178.7p. 

Meanwhile, Lancashire Holdings took another knock after it announced more departures from its underwriting arm, Cathedral.

The shares tumbled to a 12-month low of 553.5p - down 6.3pc yesterday - after the insurer said three underwriters had resigned. It comes just three months after Cathedral’s chief executive and chief financial officer left the business. 

Despite rallying by as much as 7pc in early trade, Just Eat closed in the red, 1pc lower at 382p, after full-year revenues rose 58pc to £247.6m and its pre-tax profit slipped to £34.6m.

The online takeaway service also said it expects sales of £350m this year and earnings before interest, tax, depreciation and amortisation of around £99m. 

However, Neil Campling, of Aviate Global, warned marketing costs could soar, as the 2016 guidance “does not reflect risks” of new entrants Amazon and Uber in Europe this year. “The risk of a high marketing ramp to defend share is likely if the logistics titans enter the market,” Mr Campling said. 

Finally, Plexus Holdings ticked up 2.8pc to 41.8p after an order win to provide wellhead equipment for a well off the coast of Norway. 

That's it from me for today. We'll be back again with more market movers tomorrow. 

European stocks ended the first day of March at a one-month high after hopes of a bidding war caused shares in the London Stock Exchange to soar. 

Indices in the region extended gains despite poor eurozone manufacturing data, after stronger than expected US manufacturing prompted a fall in the euro. 

Frankfurt's DAX closed up 2.3pc, while the CAC in Paris added 1.2pc and the Spanish IBEX finshed up 1.8pc.

In London, the FTSE 100 closed up 55.79 points, or 0.92pc, at 6,152.88.

David Madden, an IG analyst, said:

"The positive run that stock markets have been enjoying since the middle of last month continues, as the broadly disappointing economic indicators that were released today helped the equity rally as central banks are more likely to keep monetary policy loose.

The official and private survey of Chinese manufacturing painted a bleak picture for the country but yesterday’s cut to the reserve ratio requirement could be a sign of what to expect as Beijing does have a large number of tools available to boost the economy. Even though the rate of unemployment in the eurozone dropped today, traders haven’t forgotten about the contraction in eurozone CPI yesterday and investors are anticipating additional easing at the meeting on 10 March."

Despite the recent demand for precious metals amid the recent market turmoil, gold and silver producer Fresnillo recorded a 15pc slump in pre-tax profits for the year, sending shares 6.2pc south to 938p.

Jon Yeomans writes: 

Gold and silver miner Fresnillo said it was better positioned to withstand the commodities downturn than many of its rivals, despite falling prices taking a chunk out of its profits.

Fresnillo, which is based in Mexico but listed on the FTSE 100, reported average gold and silver prices fell 16.1pc and 10.4pc respectively in 2015, pushing its pre-tax profits down 15.4pc to $212.4m.

The miner boosted output to compensate for the fall in prices, with gold production hitting a target it had not expected to reach until 2018. Silver production was also at the top end of guidance, helped by expansion at its Saucito mine. The hike in output lifted full-year revenue 2pc to $1.4bn.

Reflecting on a tough year for the global mining industry, Mario Arreguín, chief financial officer, admitted Fresnillo was not immune to market conditions, but said: “I do think we were better positioned to deal with it. We had no write-offs, no impairments and no need to sell any of our assets.”

Full report here

The euro fell to 1.0836 against the dollar, its lowest level in a month, after US PMI manufacturing data came in ahead of expectations. 

It rose to 49.5 in February - up from 48.2 in January. 

The data beat renews prospects that a rate hike could be on the cards by the Fed in 2016. 

Rhiannon Bury writes: 

Johnson Service Group is eyeing expansion in the hotel, restaurant and catering sector as it begins to reap the rewards of acquisitions it made last year.

The company’s full-year pre-tax profits, published in its annual results today, were up 9.5pc to £12.7m, which chief executive Chris Sander attributed in part to its purchase of laundry services businesses London Linen and Ashbon in the middle of 2015.

The company hopes to increase its clout in the hotel, restaurant and catering sector, where it currently holds an 18pc share of a £555m industry, Mr Sander said.

Its textile hire business continued to perform ahead of expectations, with revenue increasing 21.4pc to £188.2m. The company is particularly strong on workwear hire, where it rents garments such as overalls and chefs whites, and in which accounts for around 45pc of the market.

Revenues for 2015 were up 11.4pc to £234.4m. Johnson increased its dividend by 23.5pc to 2.10p.

Read more here

Jillian Ambrose writes: 

Tullett Prebon’s operating profits climbed 7pc last year despite a challenging trading environment as oil price volatility doubled the interdealer broker's revenues from energy trades.

Oil prices have plunged over 70pc since mid-2014, slashing profits across the industry. But the dramatic downturn has been a boon for Tullett as the market volatility has result in its customers trading more.

The interdealer broker, which plans a high profile takeover of Icap’s global broking business, reported 2015 operating profits of £107.9m compared to £100.7m in 2014.

The profit boost comes in large part due to a 13pc year-on-year increase in revenue to £796m, reflecting higher earnings in every region. Energy trading revenue, in particular, soared 102pc to £204.3m, with the oil price rout boosting activity as traders tried to manage the price fluctuations.

Read more here

US stock markets began the new month in positive territory as rising oil prices boosted stocks. 

The Dow Jones rose 0.4pc, while the S&P 500 added 0.6pc and the Nasdaq made gains of 0.9pc.

Since hitting a rock bottom towards the end of January, mining stocks have soared, some miners have even doubled in value. 

David Buik, of Panmure Gordon compares the prices from January 20 to the current day: 

"If you had bought any of these mining stocks with any conviction when equity markets hit rock bottom on 20^th January 2016, you would be very pleased with yourself or you could be described as brave but stupid. Finding the bottom of a cycle is never easy – just getting the trend right is exhilarating. Only a few had the appetite!  To those who did I doff my ‘titfer!’

"There must be a terrible temptation to take profits at these levels, though it is as well to remember that this sector has been trashed to ribbons. Has China finished falling from grace from a growth perspective?  Could it bottom at this level for a few years? Interesting to note how well Randgold has done.  What a fabulous flight to quality!  "

Elizabeth Anderson writes: 

Legal & General believes Brexit would have "little direct impact" on its business, although the company added that a vote to leave the European Union would create uncertainty for markets and the broader UK economy.

The FTSE 100-listed financial services giant, which did not sign a high-profile letter from 36 business leaders last month supporting membership of the EU, said most of its customers are based in the UK, the US and Asia, and it would therefore be cushioned from the impact of Brexit.

However, the company echoed criticisms from other business leaders that there is a lack clarity on both sides of the argument, and that the economic case for leaving is "unproven". 

L&G said: "We will continue to keep the situation under review as more and better data and analysis emerges. As one of the largest investors in the UK, we will be actively listening to companies we invest in, who will be assessing the potential impact for themselves."

L&G manages almost £720bn of assets and has around 10 million savers and investors on its books.

Full report here

Japan became the first G7 nation to sell 10-year government bonds at a negative yield today. 

Tokyo sold $21.33bn worth of bonds at a yield of -0.015.

Shares in Just Eat are currently trading up 1.1pc at 390p, easing off earlier highs of 412.8p, after it announced a 58pc jump in revenues. 

Ben Martin writes: 

Just Eat has assuaged concerns it will be hit by competition from rivals, such as Deliveroo, with results that one analyst claimed had put sceptics of the online takeaway company “back in their place”.

Shares in Europe's largest online takeaway business rose as much as 7pc to 412.8p in early trade after the FTSE 250 firm announced it handled 96.2m orders last year, a 57pc increase on 2014, worth a total of £1.7bn.

The number of active users jumped 65pc to 13.4m in 2015, helping to send annual revenues surging by 58pc to £247.6m.

However, because Just Eat’s 2014 results were skewed by £38.2m of one-off gains related to acquisitions, pre-tax profits fell by 39.7pc to £34.6m on a statutory basis. Excluding exceptional items, the company said profits after tax would have jumped by 80pc. During its busiest periods, it was sending as many as 2,500 orders a minute to takeaway restaurants.

Just Eat, an online platform that funnels food orders to independent takeaway restaurants, has been rocked by worries the growth of rivals – such as Hungry House, Deliveroo and GrubHub – will eat into its customer base. Analysts voicing concerns about the competitive environment, particularly in the UK, sent Just Eat shares plunging from December’s record high of 494.9p to 329.1p last month.

Read full report here

Rhiannon Bury writes: 

Office provider Regus has announced underlying pre-tax profit jumped 46pc last year to £130.4m, boosted by higher prices in some of its better-established locations.

Revenues for the company, which provides temporary workspace in 977 cities across the world, rose 15.6pc to £1.9bn.

Regus’ results were helped by its opening of 554 new locations in 2015. The company was also able to raise prices in some areas where it has had offices for a number of years.

Shares rose 1.76pc on the back of the news this morning, to almost £2.95.

Mark Dixon, chief executive of Regus, said he remained confident in the company's business model and the industry more generally.

Read more here

European stock markets extended their gains, despite a brief dip following disappointing manufacturing data across the region this morning. 

Frankfurt's DAX climbed 1.7pc, while the CAC in Paris added 0.8pc and the Spanish IBEX made gains of 1.1pc. 

In London, the FTSE 100 hit a fresh two month high in early morning trade. It is currently 0.7pc higher at 6,139.28. The move upwards comes amid a rally in LSE shares after Intercontinental Exchange confirmed it was considering making a counter bid for the group.

Alastair McCaig, an IG analyst, said: "Thee FTSE 100 has added over 500 points in the last two weeks, and as we move into Spring, it appears determined to put the dark days behind it. As impressive as this rally has been, almost all of the major European equity markets still remain well below levels they started the year at."

As Brexit concerns drove the pound to its worst week since 2009 last week,  John Wyn-Evans, Head of Investment Strategy at Investec Wealth & Investment, comments on what a Brexit would mean for equities:

 "In terms of equities, it is worth noting that large UK companies have recently been battered by influences well beyond these shores. Resource companies have been affected by collapsing commodity prices and exporters to emerging markets by the slowdown in China, for example.

"The fortunes of such large companies will not be materially affected by domestic events. Indeed, a weaker pound would bolster profits by making our exports more attractive and by flattering the translation of earnings booked overseas. Dividends declared in dollars would enhance yields to sterling investors.

"With some three quarters of FTSE 100 revenues and earnings derived overseas, large cap equities provide a natural hedge against domestic uncertainty especially the defensive healthcare and tobacco sectors and also media."

Isabelle Fraser writes: 

Taylor Wimpey's pre-tax profits soared by a record 34.1pc in 2015, as a result of a "positive" housing market, with very strong demand.

The UK's third biggest house builder’s pre-tax profit was in line with analysts’ expectations at £604m, up from £450m, as it built more homes and sold them for more money.

The FTSE 100 company, which was the best performer in the index last year, completed 7.5pc more homes than in 2014, bringing the total to 13,219. It also had a strong start to 2016, selling  0.77 per site per week, a number which is up 13pc on this time last year. 

The company said that 2015 was a strong year, and any uncertainty created by the election was quickly overcome: "During 2015, the UK housing market was positive, with high levels of customer confidence and demand converting into increased sales and healthy sales price growth.

"Despite the uncertainty in the lead up to the general election, we saw a very stable and solid housing market in the first half of the year, with resilient sales rates and small incremental increases in house prices.

Read more here

Shares in Direct Line are changing hands at 407.8p - up 4.9pc - after it posted an operating profit of $726m for 2015. 

Elizabeth Anderson writes: 

Insurer Direct Line said gross written premiums in its motor section rose 4.8pc last year to £1.4bn, as premium rates rose across the car industry as a whole, and a “refresh” of its Churchill nodding dog brand was viewed as a success.

The company rolled out a seven day car repair service in the past year, as well as guaranteeing hire car on comprehensive motor policies, in an attempt to entice more customers to its brands and to encourage more to renew their policies with Direct Line.

Overall, the FTSE 100 insurer reported a 1.7pc rise in gross written premiums – the value of all the policies written by the insurer – to £3.1bn in the 12 months to the end of December, with pre-tax profits of £507.5m. Direct Line also offers home insurance, as well as personal and rescue policies.

The company added that total costs for ongoing operations fell 4.6pc last year to £884.7m, as it reduced its marketing budget from £123.9m in 2014 to £117.8m last year.

Paul Geddes, the company's chief executive, said: "Growth in own brands policies has contributed to overall premium growth and, alongside lower costs, has again allowed us to deliver an improved financial performance for the year. Operating profits are up and return on tangible equity is well ahead of our target, despite the bad weather at the end of the year."

Supermarket group Morrisons may be promoted from the mid-cap index to the FTSE 100 tomorrow, the London Stock Exchange said. 

The LSE said: "FTSE 250 constituents or new entrants that are at 90th position or above and eligible for potential entry into the FTSE 100 Index are Paddy Power Betfair, Mediclinic International plc and Morrison (Wm) Supermarkets." 

In November, the Bradford-based supermarket crashed out of the FTSE 100.

The announcement comes a day after Morrisons' shares surged 5.9pc after it struck a supply deal with Amazon (Read full report here). 

Meanwhile, Sports Direct and Aberdeen Asset Management face relegation from the blue chip index. 

A final decision and approval of changes will be taken by the FTSE Russell EMEA Committee during its review tomorrow – using today's closing prices. 

Shares in Greggs are poised for their sharpest daily gain in seven months after its pre-tax profits soared 25.4pc to £73m. The FTSE 250 stock surged 13.8pc to £11.78.

Elizabeth Anderson writes: 

Sausage rolls, cakes and increasingly salads are tempting customers into Greggs, which rang up a 25.4pc jump in pre-tax profit last year.

The high street baker took £835.7m in sales last year, a 5.2pc rise, with profit-before-tax coming in at £73m as margins improved and it expanded its product ranges to include more salads and healthier options. 

Greggs, which has almost 1,700 units across the country, is on track to invest £100m in manufacturing and distribution over the next five years to make its operations even leaner.

Roger Whiteside, chief executive at Greggs, said he expects sales to grow this year as the UK economic recovery strengthens.​

"This year has started well and the consumer outlook remains positive with disposable incomes expected to grow further in 2016. We are confident of delivering a further year of underlying growth," said Mr Whiteside.​

Read more here

The unemployment rate in the eurozone fell to 10.3pc last month - that's down from 10.4pc in December. 

The key drivers of the decline were Spain, Germany, Netherlands and Ireland, offsetting increases in France and Italy. 

Pantheon Macroeconomics said: "This data suggest the cyclical recovery remains on track, but we caution that unemployment is a lagging indicator. Any weakness from the recent dip in survey data, and signs of slightly weaker GDP growth, in Q4 and Q1 won’t show up in the unemployment reports until later this year."

After Barclays announces its plans to sell its African bank, Panmure Gordon's David Buik comments: 

"Chairman John McFarlane hasn’t enjoyed the greatest six months of his life, having seen the bank’s share price fall from 300p on 1^stAugust 2015 to 161p (down 6.2pc today) and 46pc since August. 

"He was been weighed down by a change in leadership, replacing Antony Jenkins with Jes Staley, who was appointed CEO on December 1 2015. He has also seen fresh capital requirements hurt the profitability of the bank, with litigation damages and PPI impairment charges constantly increasing. Barclays is attempting to focus on core businesses, having seen many turn unprofitable. Emerging nations are a problem; hence it is looking to sell its 62.5pc stake in Barclays Africa (ABSA predominately).

"What rattled investors’ cage this morning was the cutback in dividend, which really triggered the visceral treatment of its share price. The decision to cut the dividend was probably influenced by the bank’s vulnerability due to Basel 3 capital requirements, which manifested themselves from the December stress tests. 

" I would like Messrs McFarlane & Staley to talk about plans for the future and what will happen to investment banking in New York, rather than pontificate on BREXIT. Their views on this subject are of limited interest. Also the market needs updating on the spat between Amanda Staveley and the bank over payments made or not for the introduction of Qatar capital in 2008. "

Shares in trading and mining group Glencore slipped 3.4pc after  adjusted earnings before interest, tax, depreciation and amortisation fell 32pc to $8.7bn.

Jon Yeomans writes:

Mining giant Glencore reported a $4.9bn (£3.5bn) pre-tax loss for 2015 as the falling prices of metals, minerals and crude oil ate it into its business.

The FTSE 100 company, based in Switzerland, recorded $5.8bn in impairments as it scrapped projects and wrote down the value of its assets. 

Glencore, in common with its peers, has been hit by falling prices of iron ore, copper, nickel and other metals, as an economic slowdown in China has led to global oversupply. The company also has oil interests, which have been affected by the low price of crude, which is trading at around $34 a barrel compared to over $100 in 2014.

Glencore’s adjusted earnings before interest, tax and other costs came in at $8.7bn, down 32pc on the year before, but ahead of analyst expectations.

Revenue fell to $170bn from $221bn in 2014.

Full report here

The pound dropped to an intraday low of 1.3909 against the dollar after UK manufacturing activity slumped to its lowest level in 34-months. 

However, sterling has since eased back to $1.3971.

Here's a chart of what happened to the pound when the data was released: 

Activity in the UK's manufacturing sector dropped to a 34-month low, data showed this morning. 

According to Markit, the Purchasing Manager's Index fell to 50.8 in February, down from 52.9 in the previous month. 

It is its lowest reading since April 2013. 

Samuel Tombs, of Pantheon Macroeconomics, said: " The deterioration in the PMI to its weakest level since April 2013 largely reflected a plunge in the output balance, to 53.2 from 59.0 in January. The balance had looked likely to fall from January’s high level, given much weaker evidence from other surveys.

"The fall in the total orders balance to 50.2 from 52.5, reflecting outright falls in orders at consumer and investment good manufacturers, suggests the output balance will fall further over the coming months. Note too that the slight rise in the export orders balance, to 49.3 from 48.8, indicates that domestic demand now is effectively stagnating too. The U.K.’s slowdown can’t be blamed exclusively on weak overseas demand any longer."

Shares in Barclays plunged 9.3pc to 165.1p after  it said it would sell its African bank and full-year pretax profits fell 2pc. 

Tim Wallace writes: 

Barclays is to sell its African bank, its Iberian credit card business and its Asian wealth management operations in the latest sign that the British bank is scrapping the global ambitions that prompted much of its growth in the years before the financial crisis.

Pre-tax profits fell 8pc to £2.1bn in 2015, in part because of an additional £2.2bn provision for payment protection insurance (PPI) redress over the year. That includes a provision of £1.45bn in the final quarter alone, a charge which takes the bank's total PPI costs so far to £7.4bn.

Barclays will pay a dividend of 6.5p per share for 2015, but plans to cut the payout to shareholders to 3p in 2016 and in 2017. Shares fell 10.5pc on the announcement.

By slimming down an under-sized and under-performing global businesses, new chief executive Jes Staley hopes to end up with a strong core bank, with healthy retail operations in the UK and investment banking operations in London and New York.

“Our 2015 performance demonstrates the strength of Barclays’ core businesses, as well as the importance of continuing to make progress inrunning down non-core and controlling our costs to deliver the returns our shareholders deserve in a reasonable timeframe," said Mr Staley.

Full report here

Oil prices continued to make gains this morning - up 0.2pc to $36.64 a-barrel, after Saudi Arabia pledged to "remain in contact with all main producers in attempt to limit volatility". 

Despite yesterday's rally in oil, Mike van Dulken, of Accendo Markets, said: 

"It’s looking increasingly unlikely we’ll see production controls implemented in June, since OPEC sources indicate it will be too early to gauge how quickly Iranian output is growing. A desire to ‘test’ Russia’s commitment to any plan is also likely to delay progress. So they’ve agreed to freeze production one day, maybe. Nonetheless, it’s clear that belief in this proposed plan is still there as crude prices continue to trend up from mid-Feb lows."

At 51.2, the eurozone's manufacturing sector has fallen to its lowest level in 12 months in February. 

Expansions in production, new orders, new export business and employment all lost momentum, Markit said. 

The PMI has remained above the neutral 50.0 mark for 32 consecutive months.

Commenting on the data, Chris Williamson, Chief Economist at Markit said:

“With factory output in the eurozone showing the smallest rise for a year in February, concerns are growing that the region is facing yet another year of sluggish growth in 2016, or even another downturn.

“Lacklustre domestic demand is being compounded by a worsening global picture. Exports either fell or rose more slowly in all countries surveyed with the sole exception of Austria.

“For a region in desperate need of lower unemployment, the near-stalling of jobs growth in the manufacturing sector comes as disappointing news. Firms are cutting back on their hiring due to worries about the outlook.

“Prices are meanwhile being dropped as firms endeavour to boost sales, suggesting deflationary pressures have intensified. Input prices are falling at a rate not seen since July 2009.

“With all indicators – from output and demand to employment and prices – turning down, the survey will add pressure on the ECB to act quickly and aggressively to avert another economic downturn.”

Shares in London Stock Exchange group are top of the blue chip index this morning, hitting a record high in early trade, after Intercontinental Exchange confirmed it is considering making a bid for the group. 

Last week, LSE confirmed it was in merger talks with Deutsche Boerse. 

The FTSE 100 stock is currently changing hands at £28.80 - up 7.6pc. 

Full report here: 

London Stock Exchange’s £20bn merger with Deutsche Boerse could be gatecrashed by the owner of the New York Stock Exchange, according to reports.

Intercontinental Exchange (ICE), which  operates global exchanges, clearing houses and data services, has appointed Morgan Stanley to advise on a higher offer for the British group, it is claimed.

ICE is unlikely to make its move before a UK takeover deadline on March 22, Bloomberg reported.

News that the LSE was in “detailed discussions” with its German rival about an all-share merger that would leave its investors owning 45.6pc of the company emerged last week.

Both exchanges have been on buying sprees since their last attempt to merge failed in 2005, and now hope to create the biggest market player in Europe, while teaming up their derivatives trading and clearing arms to cut costs.

As European stock markets tick higher this morning, Mike McCudden, of Interactive Investor, comments: 

"Equities are looking tired this morning as we await more manufacturing data from across the euro zone. Early indications are that they will not impress and on top of negative inflation, talk of more stimulus is hitting the Euro.

"Monetary easing in China has given commodity stocks a boost but we've been here before many times now and its evidently not the solution. As the US markets are poised for a bitterly contested 'Super Tuesday' we may well see investors  take a risk-off approach and find some safe havens."

European bourses extended yesterday's gains hitting a one-month high this morning, after shares in the London Stock Exchange rallied after Intercontinental Exchange confirmed a possible counter bid for the group. 

Frankfurt's DAX rose 1.5pc, the CAC in Paris added 0.6pc and the Spanish IBEX edged up 0.8pc. 

Meanwhile, the FTSE 100 touched 6,142.61, a jump of 0.8pc, and its highest level since January 5. 

Here's a look at the direction the FTSE has taken today: 

Activity in China's manufacturing sector shrank more sharply than expected last month, official data showed overnight. 

The official Purchasing Managers' Index fell to 49.0 in February - down from 49.4 in the previous month. 

A reading above the 50 point mark represents growth, while one below this level reflects contraction. 

It was the sector lowest reading since November 2011. 

Michael Hewson, of CMC Markets, said: "The timing of yesterday's Chinese easing move shouldn't have been too much of a surprise given that the G20 meeting is now in the rear view mirror.

"The Chinese do have form for keeping things on an even keel in the lead up to these sorts of gatherings, to avoid criticism, before loosening the reins in the aftermath. 

"While this morning’s manufacturing PMI numbers aren't too much of a surprise, both coming in worse than expected at 49 and 48 respectively, the concern is that the services sector isn't exactly firing on all cylinders either."

Good morning and welcome to our live markets blog. 

Overnight, Chinese stock markets enjoyed a late afternoon rally following yesterday's move by the country's central bank to slash the reserve requirement ratio for banks, in what was its latest attempt to salvage the slowing economy. 

The CSI300 index rose 1.9pc, while the Shanghai Composite index advanced 1.7pc. 

The move upwards comes despite another bout of disappointing manufacturing data, yet another signal the slowdown in China is deepening. 

In Japan, the Nikkei also closed up 0.4pc as sentiment was boosted by China's stimulus move. 

Here's a chart reflecting on the trading session overnight: