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FTSE rallies as investors shrug off trade war fears

FTSE 100 builds on Friday's gains as investors continue to celebrate break in Italian political deadlock and strong US jobs figures.

 
FTSE rallies as investors shrug off trade war fears
 

The FTSE 100 has built on gains amid continuing bullishness following agreement on a new Italian government last week.

The UK blue-chip index rose 33 points, or 0.4%, to 7,734, with Friday's strong US jobs figures adding to the optimism and offsetting trade war fears sparked by the US imposition of tariffs on the European Union, Canada and Mexico last week.

'Carrying over last Friday's robust relief rally, investors continued to ignore the trade tensions sprouting out of the US in favour of celebrating the improved political situation in the eurozone,' said Connor Campbell, financial analyst at Spreadex.

Investors were also buoyed by Friday's strong US jobs figures, with 223,000 jobs added to the economy in May and unemployment falling to 3.8% a new low since the financial crisis.

Both the Italian political breakthrough and solid US employment data have helped to soothe any jitters sparked by US president Donald Trump's announcement of a new raft of tariffs, a move met with retaliation from the EU.

'Despite threats and recriminations from China and other global leaders, investors are actively choosing to ignore the trade tariff tensions, with global equity markets rising,' said Rebecca O'Keeffe, head of investment at Interactive Investor.

'This chicken-and-egg situation, where markets don't believe that tariffs are a credible threat, combined with president Trump's position that markets are not worried about the issue, could lead to an unpleasant reality for both sides eventually. However, for the moment investors are benefiting from positive sentiment.'

On the FTSE 100, EasyJet (EZJ) led the way, up 3.6% at £17.75 as analysts at Deutsche Bank raised their price target on the budget airline group to £19.15 from £15.60.

British Airways owner International Airlines Group (ICAG) joined it at the top of the index, up 2.7% at 704p.

Smurfit Kappa (SKG) fell to the bottom, down 6.7% at £28.94 as rival packaging group DS Smith (SMDS) launched a takeover bid for Spanish peer Europac (PYCE.MC). Shares in DS Smith rose 2.2% to 574.7p.

Among 'mid-cap' stocks, Alfa Financial Software (ALFAA) continued to tumble, down 16.1% at 155.2p as analysts rushed to slash their target prices following  Friday's profit warning.

Shares in the group have now lost half their value since Friday's news a major customer had delayed an implementation project.

The latest portfolio details for the Independent (IIT ) investment trust show a 2.6% position at the end of March.

Among 'small-cap' stocks, embattled retailer Carpetright (CPRC) tumbled 14.3% to 31.7p.

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