By Shashwat Awasthi
(Reuters) - UK stocks began the new quarter on a solid footing on Monday, with the main index touching a more than nine-month high, as a thaw in the U.S.-China trade dispute lifted market sentiment and spurred a rally in global stocks.
The FTSE 100 (FTSE), which in June enjoyed its best month since January, surged 1%. The mid-cap FTSE 250 (FTMC) climbed 0.9%.
Appetite for risky assets soared after President Donald Trump on Saturday offered concessions to China's Xi Jinping at the G20 summit, including holding off slapping new tariffs on goods and relaxing restrictions on tech firm Huawei.
Beijing, in turn, agreed to make new purchases of U.S. farm products as part of renewed negotiations, aiding gains in Asia as well as on Wall Street, where the S&P 500 (SPX) hit a record high.
Investors piled into equities, especially those of banks with a big presence in Asia such as HSBC (L:HSBA) and Prudential (L:PRU). Shares of miners, sensitive to news surrounding top metals consumer China, also boosted the main index.
But with no deadline set for the deal and few details on how the parties would resolve key differences that caused previous negotiations to stall, analysts took a cautious stance on the weekend's trade-related developments.
"In the big picture, it doesn't change anything," said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.
"It (G20 meeting) was never likely to solve the whole problem, but it's a useful stepping stone."
Demand for commodities such as gold waned as investors flocked to stocks and the U.S. dollar, leading to a 1.6% drop in the shares of precious metals miner Fresnillo (L:FRES).
Oil majors Shell (L:RDSa) and BP (L:BP) advanced as crude prices surged after top producers Saudi Arabia, Russia and Iraq backed a plan to extend supply cuts for another six to nine months. [O/R]
The pound, however, was pressured after the dollar firmed and as data showed British manufacturers suffered the sharpest fall in activity in more than six years last month, highlighting the toll a protracted Brexit process has taken on the country.
In one of the few news-driven moves, media services firm Future Plc (L:FUTR) climbed nearly 7% on the mid-cap index after it forecast full-year results that were ahead of previous expectations.
Stagecoach (L:SGC) slid 7.6% after Deutsche Bank cut its price target for shares in the train and bus operator.