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London open: Stocks gain on China measures
UK stocks gained on Monday as China’s central bank introduced measures to stem capital outflows.
The People’s Bank of China said on Monday it will start implementing a reserve requirement ratio (RRR) on offshore banks’ domestic deposits to restrict speculation on further depreciation of the yuan.
Global financial markets have been volatile in recent weeks after the PBoC allowed the yuan to fall sharply before moving aggressively to try to steady the currency.
The central bank is reportedly planning to raise the RRR next week for yuan deposits placed in yuan clearing banks to the normal level.
Meanwhile, oil prices remained in focus as they continued to slide. At 0903 GMT, Brent crude fell 1.7% to $28.44 per barrel and West Texas Intermediate dropped 1.5% to $28.97 per barrel.
The further decline in crude prices came as sanctions on Iran were lifted, raising concerns that the oversupply in the market will worsen.
In UK news, a report from Rightmove showed house prices rose 6.5% in January compared to a year ago. Aside from the release on house prices, the economic calendar is bare on Monday.
On the company front, Home Retail rallied after agreeing to sell Homebase to Wesfarmers.
Wolseley advanced as it announced its chief executive Ian Meakins will retire on 31 August 2016.
Shire edged higher after Exane BNP Paribas upgraded the stock to ‘outperform’ from ‘neutral’ and reiterated its 5,700p price target following the company’s agreed merger with Baxalta.
Oil producers were in the red including BHP Billiton, BP and Tullow Oil on the oil price slump.
