London midday: ARM leads markets higher after strong first quarter

23rd Apr 2013 11:31

The UK stock market was making decent gains by Tuesday lunchtime as strong performances from ARM Holdings, AB Foods and IAG helped to offset some weakness in the mining sector.Sentiment was lifted this morning as gloomy economic data from the Eurozone sparked speculation that it could open the door to further stimulus measures from the European Central Bank given the recent cooling of inflationary pressures.The Markit Eurozone composite purchasing managers' index (PMI) for the month of April was unchanged on March's reading of 46.5. While the figure was in line with expectations, the sub-50 reading indicated a drop in activity in the region for the 19th time in the past 20 months. Figures from powerhouse Germany specifically were weaker than expected.Also supporting stocks this morning was the news that UK public borrowing fell from £120.9bn to £120.6bn in the financial year to April. Borrowing in March alone, excluding interventions such as bank bailouts, fell from £16.7bn a year earlier to £15.1bn. The news should come as a relief to Chancellor George Osborne who has faced mounting criticism over his strict austerity measures by the International Monetary Fund and investors.Miners were under pressure this morning after a disappointing reading of Chinese manufacturing. The HSBC manufacturing PMI fell from 51.6 to 50.5 in April, worse than the fall to 51.5 expected. This follows last week's revelation of surprise slowdown in China in the first quarter, as economic growth fell to 7.7% in the first three months, worse forecasts for an acceleration to 8.0%.There is likely to be some element of caution amongst traders this week ahead of economic growth figures from the UK and US on Thursday and Friday, respectively. Consensus estimates are for a 0.1% expansion in UK gross domestic product in the first quarter and 3.1% growth in the States.FTSE 100: ARM provides a liftChip designer ARM Holdings surged this morning after smashing both revenue and profit forecasts in the first quarter and saying that full-year results will be "at least" in line with current market estimates. The firm said that its first-quarter performance was fuelled by robust licensing and record royalty revenue.Associated British Foods jumped after reporting a 10% rise in half-year revenue driven by sales at its clothing retail subsidiary Primark. Airline group IAG was among the best performers after saying that it has order 18 new Airbus A350 aircraft for British Airways.Power solutions giant Rolls-Royce was also in demand after reaching an agreement to sell its 50% stake in the RTM322 helicopter engine programme to Turbomeca for €293m.SABMiller was making gains after accelerating the promotion of its Chief Operating Officer Alan Clark to Chief Executive Officer after its Executive Chairman fell ill.Heading the other way were the miners as metals prices declined on the back of the poor Chinese data. Fresnillo, Randgold, Antofagasta and Anglo American were among the heaviest fallers. However, ENRC was bucking the trend, rebounding after heavy falls yesterday. Tullow Oil was also in the red as it revealed that it had plugged and abandoned a well offshore French Guiana after it failed to encounter any hydrocarbons. This was the latest in a string of disappointing operational updates from the FTSE 100-listed oil explorer.Utilities peers SSE and National Grid were subdued after Bank of America Merrill Lynch downgraded both stocks to 'neutral'.FTSE 250: AVEVA gains on upbeat guidanceEngineering data and IT group AVEVA Group was a high riser after saying that it expects to hit revenue and profit forecasts for the full year following good demand in its second half. Sanlam Securities released a research report this morning saying that the in-line trading update prompted it to move its rating from 'sell' to 'hold'. Premier Oil was also firmly higher after discovering oil at the Bonneville exploration well and its side track on the Catcher licence in the UK Central North Sea.