London stocks rise, buoyed by materials shares and trade optimism

The U.K.’s main stock index pushed higher to its third straight gain on Monday, buoyed in part by optimism over a coming U.S.-China trade meeting.

Sage Group PLC fell sharply on a downgrade, while among smaller companies, Mulberry Group PLC got crushed by a profit warning.

What are markets doing?

The U.K.’s FTSE 100 UKX, +0.43%  rose 0.4% to 7,591.26. The index has fallen 2% this month, in part because of a 1.4% decline last week, its biggest since the week ended March 23, according to FactSet data.

The pound GBPUSD, +0.2588%  was buying $1.2719, a gain of 0.1% against the dollar.

What is driving the market?

London tracked global equity markets higher on signs that the U.S. and China are making efforts to resolve trade differences. A report in The Wall Street Journal said negotiators on both sides are mapping out talks aimed at resolving major differences by November. The issue has proved an overhang for global stocks at times over the past several months.

U.S. stocks opened modestly higher as trading got under way.

Helped along by global trade optimism, commodity-related stocks pushed higher, with heavily-weighted Glencore GLEN, +0.34%  rose 0.l3%, fading late in the session. BHP Billiton PLC BLT, +0.97% BHP, +1.15%  rose 1%, and Royal Dutch Shell Group RDSA, +0.71% RDS.A, +0.93%  added 0.7%.

Some relative calm over Turkey’s currency crisis was also a factor for optimism Monday. The U.S. rejected a bid by the country to tie relief for a big Turkish bank to the release of a U.S. pastor, and the lira USDTRY, +2.3255% about 2% against the dollar. For the month of August, the emerging market currency has lost about a quarter of its value against the greenback, amid fears the country will trigger a wider emerging market crisis.

The U.K.’s negotiations to exit from the European Union will swing into focus this week with the Brexit minister Dominic Raab due in Brussels for talks Tuesday with the EU’s chief negotiator Michel Barnier.

What stocks are in focus?

Sage Group PLC SGE, -7.00%  led the losers for the FTSE 100, tumbling 7% after the enterprise-software maker was downgraded to sell from hold by Deutsche Bank, where analysts cited increasing competition in its core midmarket business.

Persimmon PLC PSN, -0.73%  and Taylor Wimpey PLC TW., -0.73% also were on the losing side, each falling 0.7%. Rightmove reported a 2.3% drop in average asking prices of newly listed homes on a seasonal basis in August.

Among smaller companies, Mulberry Group PLC MUL, -29.70%  plunged 30% after the retailer warned earnings would take a hit if sales from its concessions in the House of Fraser department stores don’t start to recover.

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