It was an upbeat start on Monday for Europe, despite significant risk events, such as the monthly US jobs report and Federal Meeting meeting minutes, due later this week.

Trading volumes were low with Wall Street sitting Monday’s session out due to the Independence Day holiday.

‘The July 4 independence holiday in the US will likely allow some respite from the recent market turmoil. That said, the week ahead still promises a lot of action,’ said Rabobank.

The FTSE 100 index was up 78.49 points, or 1.1%, at 7,247.14 at midday on Monday.

London’s mid-cap index failed to keep up with the blue-chip benchmark, held back by share price declines for DIY retailer Grafton Group and a trio of bearish broker notes for other FTSE 250 constituents.

The FTSE 250 index was up 33.52 points, or 0.2%, at 18,670.50.

The AIM All-Share index, meanwhile, was up 4.31 points, or 0.5%, at 879.52.

The Cboe UK 100 index was up 1.3% at 722.65. The Cboe 250 was up 0.2% at 16,243.77, though the Cboe Small Companies was 0.3% lower at 13,248.01.

In mainland Europe, the CAC 40 stock index in Paris was up 1.1%, while the DAX 40 in Frankfurt was up 0.5%.

The DAX ticked higher despite Germany posting its largest monthly trade deficit since its reunification.

According to Destatis, Germany swung to a trade deficit of €1.0 billion in May, from a surplus of €3.1 billion in April. The trade surplus in May 2021 stood at €13.4 billion.

The May 2022 deficit fell short of market expectations of a surplus of €2.4 billion, according to FXStreet.

The figure adds to the ‘likelihood that German GDP contracted last quarter’, Daiwa Capital Markets analysts commented.

Still, the euro rose to $1.0453 around midday London time, from $1.0406 late Friday.

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.

The pound was quoted at $1.2131 midday Monday in London, up from $1.2034 at the equities close on Friday. Against the safe haven Japanese yen, the dollar was trading at JP¥135.43, up from JP¥135.19.

In London, AO World was a notable faller, slumping 15%. The Sunday Times reported that Atradius, a credit insurer, has cut its credit cover for the online retailer’s suppliers.

Credit cover is a key part of retail supply chains. It offers cover for firms should customers not pay debts in time, or at all. Without cover, suppliers would seek payments upfront.

Also falling - and holding back the FTSE 250 - were Pets At Home, Dunelm, Ashmore and Grafton.

Pets At Home lost 11% after RBC cut the stock to ‘underperform’ from ‘sector perform’. Home furnishings retailer Dunelm lost 1.7% as RBC cut its recommendation to ‘sector perform’ from ‘outperform’.

Emerging markets-focused asset manager Ashmore gave back 3.6% after Numis lowered it to ‘hold’ from ‘add’.

Grafton slumped 6.9% 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 Grafton’s boss until the end of the year, ‘in line with his service agreement’.

AJ Bell analyst Russ Mould commented: ‘The sign of a well-respected business leader is when the share price sinks on news of their departure. That’s happened with Grafton after Gavin Slark handed in his notice after 11 years at the top. He’s helped to sharpen the company’s focus and expand geographically, breathing some life into the business and that’s why investors are disappointed he is now leaving.’

Nanosynth jumped 83% as it updated on plans to move to the heating, ventilation, and cooling market, after demand for face masks has waned.

The digital monitoring and safeguarding systems manufacturer said its partnership with Volz Holdings remains of ‘great value’ despite weakening demand for surgical masks as Covid restrictions ease.

The duo plans to take technology developed to use it directly within products in the HVAC market, nanosynth said on Monday.

A fifth trial production run is due to take place in the coming weeks and nanosynth is now confident to apply for a UK Registration, Evaluation, Authorisation and restriction of Chemicals application with the UK Health & Safety Executive.

The firm also moved to soothe fears on the pace of its turnaround and ‘irregular newsflow’.

It said: ‘The group would like to emphasise that good momentum is being gained and updates are being provided to shareholders when appropriate to do so and in accordance with the company’s regulatory obligations.’

Brent oil was quoted at $111.55 a barrel midday Monday, up from $110.84 late Friday.

Oil producers, who suffered share price slides in London on Friday, were on the up on Monday.

Harbour Energy climbed 4.2%, BP added 3.8% and Shell rose 3.3%. In Paris, TotalEnergies was up 3.2%, while in Milan, Eni added 2.8%.

Gold was quoted at $1,805.50 an ounce midday Monday, down slightly from $1,806.73 late Friday.

With the economic calendar for the remainder of Monday is light, focus turns to the rest of the week, including a slew of PMIs on Tuesday, eurozone retail sales on Wednesday and the latest US jobs report on Friday.

On the central banking front, the Reserve Bank of Australia announces its latest interest rate decision overnight. The US Federal Reserve and European Central Bank release minutes from their latest monetary policy meetings on Wednesday and Thursday, respectively.

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Issue Date: 04 Jul 2022