Source: Sharecast
The FTSE 100 was up 0.2% at 9,242.78.
French politics remained in focus after Prime Minister Francois Bayrou lost a confidence vote.
Kathleen Brooks, research director at XTB, said: "Now that the vote has been lost, the focus will shift to what will happen next. President Macron is expected to appoint a new PM in the coming days, the fifth in less than 2 years, to tackle the country’s debt problems. The issue is that President Macron is running out of candidates to be PM, which is why there is a growing call from his political rivals to call new legislative elections.
"It looks like Macron will resist such calls now, and a new PM will be elected. The market will be looking to see if a new government can make some progress on government cuts, potentially by ringfencing public holidays and adding more taxes for the wealthiest citizens. Either way, France has Europe’s widest budget deficit, and Bayrou’s successor is still left with a growing pile of debt to sort out. Bloomberg analysis shows that if France cannot make the necessary cuts, then French national debt could rise by 10% in the next 5 years to 125% of GDP."
On home shores, investors digested the latest figures from the British Retail Consortium, which showed that retail sales grew at a solid pace in August, capping off a strong summer for retailers with activity receiving a boost from warm weather and an interest-rate cut.
Total retail sales increased by 3.1% compared with last year, the BRC-KPMG retail sales monitor showed.
That followed a 2.5% annual increase in July and a 3.1% gain in June, and was comfortably ahead of the 12-month average growth rate of 2%.
Food sales were up 4.7% on last year, accelerating from the 3.9% gain in July, though this was largely down to inflation, with food prices up 4% in August. Non-food sales growth also picked up to 1.8% from 1.4%, the BRC said.
Meanwhile, in-store non-food sales were 1.3% higher, while online non-food sales gained 2.7%.
"Sunny weather and an interest rate cut helped August round off a solid summer of sales," said BRC chief executive Helen Dickinson.
"Computing performed well as parents readied children for the new academic year, and gaming continued to show strong sales. Furniture also did better for the second month in a row, following several months of falling sales. New school clothing and footwear did not sell as well as expected, as some families opted for second-hand purchases."
In equity markets, Anglo American shot higher as it said that it and Canada’s Teck Resources have agreed a merger "of equals" to form the Anglo Teck group headquartered in Canada and expected to offer investors more than 70% exposure to copper.
The news lifted the mining sector, with Glencore and Antofagasta also up sharply.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Anglo American’s merger with Teck is its latest strategic pivot that cements copper at the heart of its portfolio. With over 70% copper exposure and a top-five global position, the combined group is positioned to ride the structural demand story tied to electrification and energy transition. The $800m in annual cost synergies and $1.4bn EBITDA uplift from Chilean asset integration are compelling. But the real prize is growth optionality, leveraging a pipeline of brownfield and greenfield projects across the Americas.
"For Anglo investors, the $4.5bn special dividend sweetens the near-term picture, while the long-term upside hinges on execution and a green light from the regulator. Back-of-the-hand maths suggests Teck holders are getting a healthy premium from the deal, and shares of the Canadian miner have soared in after-hours trading."
Elsewhere, Computacenter rose as it posted a dip in first-half pre-tax profit but struck an upbeat note on the outlook and said it expects some recovery in public sector activity in Germany.
Segro was boosted by an upgrade to ‘buy’ at Goldman Sachs.
On the downside, homeware retailer Dunelm tumbled as it said in its full-year results that it was pleased with early trading in the new financial year, but has yet to see signs of a sustained consumer recovery.
Russ Mould, investment director at AJ Bell, said: "Dunelm is holding its head above water in a tricky retail environment, yet investors clearly want more judging by the negative market response to its latest results.
"Sales and profits have moved higher, and the company is cautiously optimistic about its future. However, profit margins have shrunk slightly, net debt has nearly doubled, and the company says it hasn’t seen any signs of a sustained consumer recovery.
"Dunelm needs to keep the ship steady in this tricky environment and it’s doing a fair job. Chief executive Nick Wilkinson can be proud of the business he’s helped to grow as he bows out with this set of results."