UKX FTSE 100 Index

By Emily Horton

Rolls Royce jumps on news it's stockpiling inventory in preparation for Bexit

The U.K.'s stock market was positive on Wednesday, as trade optimism held the markets in the green, despite the fact that U.K. Prime Minister Theresa May is set to face a leadership challenge amid broad discontent over Brexit.

Despite upbeat trade prospects, London stock markets registered a number of decliners, including John Wood PLC and Sainsbury's.

How are the markets performing?

The FTSE 100 was up 0.8% to 6,860.73, after closing up 1.3% on Tuesday.

   The pound   held steady at $1.2529  from a close of 1.2489 in New York late on Tuesday. 

What is driving markets?

U.K. Prime Minister Theresa May will face a vote of confidence in her leadership this evening (https://www.fnlondon.com/articles/theresa-may-to-face-vote-of-confidence-this-evening-20181212), after it was confirmed on Wednesday morning that a group of anti-EU Conservative politicians had secured enough votes to force a leadership challenge.

If the Conservative lawmakers vote against May, the search for a new leader of the party will begin, which could take a number of months to complete. If May wins the vote, her leadership cannot be challenged for another year.

On the announcement of the challenge, sterling slumped to $1.24937 from $1.25118 before the news, but steadied shortly after given a number of positive global trade developments.

China attempted to ease the tension with the U.S. as its top trade official Chinese Vice Premier Liu He informed U.S. negotiators that China planned to reduce auto tariffs and boost purchases of soybeans and other crops.

Meanwhile, U.S. President Donald Trump said he's ready to intervene in a growing crisis over a Chinese Huawei executive if it can help trade relations with the country, according to an interview with Reuters (https://www.reuters.com/article/us-usa-trump/trump-says-would-intervene-in-arrest-of-chinese-executive-idUSKBN1OB01P).

What stocks are active?

Mining heavy-weights lead the gainers, with Rio Tinto PLC (RIO.LN) and Glencore (GLEN.LN) adding almost 2% each.

U.K. auto stocks gained, with Rolls Royce Holdings PLC (RR.LN) jumping 2.48% on the news that it's stockpiling inventory in preparation for Brexit (http://www.marketwatch.com/story/rolls-royce-starts-brexit-stockpiling-2018-12-12), with 2018 results set to finish at the upper end of its guidance.

John Wood Group PLC (WG.LN) shares dropped by just under 10%, as the energy services company reported expected revenue in 2018 to be 10% higher than in 2017.

In supermarket stocks, J Sainsbury PLC (SBRY.LN) fell by almost 3% as merger issues unfolded.

(END) Dow Jones Newswires

December 12, 2018 07:14 ET (12:14 GMT)

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