Lunchtime market roundup: European stocks higher on US-China optimism

Stocks in Europe were higher on Monday midday after talks between the US and China to be held this week were confirmed, while the price of oil declined.

But warnings over the UK chancellor's wafer-thin fiscal headroom, alongside France's soaring government debt, offered a stark reminder of the fragility of public finances.

The FTSE 100 index traded up 100.10 points, 0.9%, at 10,759.23. The FTSE 250 added 255.31 points, 1.1%, at 24,460.73, and the AIM all-share added 1.15 points, 0.1%, at 797.24.

The Cboe UK 100 rose 1.0% at 1,070.52, the Cboe UK 250 added 1.2% at 21,240.71, and the Cboe Small Companies climbed 0.2% at 18,761.00.

In European equities on Monday, the CAC 40 in Paris surged 1.0% and the DAX 40 in Frankfurt shot up 1.2%.

In New York, the Dow Jones Industrial Average is called up 0.8%, the S&P 500 up 0.7% and the Nasdaq Composite 1.1% higher.

Sterling rose to USD1.3381 from USD1.3372 at the time of the London equities close on Friday. Against the euro, it faded to EUR1.1649 from EUR1.1661.

Against the dollar, the euro advanced to USD1.1482 from USD1.1466. The dollar rose to JPY157.20 from JPY157.07.

China's leader Xi Jinping will visit the US this week for talks with President Donald Trump, Beijing confirmed on Monday.

Xi will be there from Wednesday to Friday, a government statement said, without adding further information.

Trump will personally welcome Xi at Joint Base Andrews on Wednesday before their meetings the following day, a US official confirmed. The US leader was welcomed by China's vice president when he landed in Beijing for his state visit in May.

"I'll be discussing almost everything with him," Trump told reporters aboard Air Force One on Sunday.

Supported by China optimism, miners moved higher in London. China is a major buyer of minerals.

Antofagasta was up 4.1%, Anglo American shot up 4.0% and BHP was up 1.7%.

China optimism was not limited to miners, however. Asia-focused insurer Prudential rose 0.9%, while lenders Standard Chartered and HSBC were up 2.2% and 1.9%.

Brent oil was quoted at USD100.84 a barrel, down from USD104.37. Gold traded at USD4,349.46 an ounce, down from USD4,355.67.

AJ Bell analyst Russ Mould commented: "Comments from Donald Trump signalling he would 'probably' be open to meeting his Iranian counterpart at the UN General Assembly this week, and suggestions that shipments of oil and gas through the Strait of Hormuz are at a six-month high, helped pull oil down towards the USD100 per barrel mark. This is still more than 40% above pre-war levels and firmly in alarm-bell territory in terms of the inflationary pressures it is unleashing, but at least the trajectory is more favourable."

The yield on the US 10-year Treasury was quoted at 4.95%, narrowing from 5.01% at the time of the London equities close on Friday. The yield on the US 30-year Treasury was quoted at 5.29%, narrowing from 5.34%.

In London, the yield on 10-year gilts slumped to 5.21% from 5.31%.

UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month's budget, as soaring borrowing costs because of the Iran war and weaker growth has wiped nearly £12 billion off the UK government's fiscal headroom, according to a new report.

The latest KPMG economic outlook estimates that Healey could be left with headroom of about £12 billion in the autumn, down from £23.6 billion at the time of the spring forecast.

It said rising borrowing costs on the UK's debt after the Middle East conflict has already cut about £9 billion off the headroom, with sluggish growth and expected downgrades from the Office for Budget Responsibility likely to reduce it by about another £2 billion.

Analysts at Deutsche Bank commented: "The bad news? Healey's headroom has likely diminished more. Interest rates have pushed higher. Small changes to the fiscal watchdog's immigration assumptions could also pull down on the chancellor's headroom, including higher inflation, lower property transactions, and weaker house prices. The energy shock will also squeeze real disposable incomes, pulling down on growth in the near term.

"The good news? There is genuine economic momentum behind the chancellor. Growth has been stronger than the OBR expected this year. Equity markets have also proven more resilient. The labour market is also on stabler footing. And ultimately, the proof has also been in the pudding: measured receipts so far this year have been tracking ahead of OBR projections – albeit modestly."

Over in France, the debt mountain is growing and will this year be at its highest level since 1978 because of a soaring deficit, the country's finance ministry said Saturday.

A ministry source told reporters the public debt would reach 119.3% of GDP in 2026 and 121.7% in 2027 – more than double the 60%-of-GDP reference limit EU member countries are required to aim for.

Those figures are unprecedented since 1978, according to France's statistics institute Insee.

ING analysts commented: "France's fiscal position is worse than expected, and the government has not yet presented a fully documented response. Debt will keep rising, while political fragmentation means that a credible long-term solution is unlikely to emerge soon."

Back in London, Elixirr International reported a hefty increase in AI-driven sales as it reported double-digit growth in half-year sales and profit.

The London-based consultancy said pretax profit rose 17% to £18.0 million in the six months ended June 30 from £15.4 million a year prior, with revenue up 25% to £89.0 million from £71.4 million.

Despite this, shares in Elixirr plummeted 16%. Broker Peel Hunt downgraded its rating on Elixirr to 'reduce' from 'buy' and slashed its share price target to 570p from 1,100p.

One stock that was on the up, Smarter Web surged 25%. The web design and technology company has a bitcoin-backed balance sheet. The cryptocurrency hit its best level since January.

Elsewhere, 80 Mile jumped 55%. The exploration and development firm surges as Greenland-linked stocks are boosted by a US-Denmark deal.

A deal announced by US President Trump gives Washington "permanent control" over Greenland's security, he said, and bars Russian and Chinese bases from the Arctic territory. Denmark and Greenland – an autonomous Danish territory – both hailed the deal and said they would sign it on the sidelines of the UN General Assembly in New York.

Since returning to the White House in January 2025, Trump has repeatedly insisted that Washington needed to control Greenland for strategic reasons, alarming Nato ally Denmark and sparking fierce pushback from the alliance.

Earlier this month, 80 Mile announced it agreed indicative terms with Texas-based Greenland Energy Co for an all-share merger. The proposed transaction values its equity around £61.5 million. Greenland Energy shares have more than doubled in pre-market dealings in New York on Monday to USD2.93 from their USD1.20 closing price on Friday.

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