However, we should not get too carried away and think that Britain's economic issues are over. "All the usual health warnings for the FTSE 100 apply. It’s dominated by resources companies and multinationals, so tells us relatively little about the UK economy itself. Once it’s put in an international context, the performance looks far less impressive and owes much to the long-term deterioration in the pound",  Bloomberg's John Authers said in his column this morning 

However, British inflation is now lower than in America for the first time in two years, which strengthens the case for interest rate cuts. Interest rate futures on Monday fully priced in a first quarter-point interest rate cut by the Bank of England for August and see two rate cuts before the end of the year, an earlier start to cuts than priced in last week.

Equities also gained as investors’ focus shifted from Middle East tensions to results scheduled for this week. The FTSE 100 index opened up 0.4% this morning, while European stock markets also moved higher, following the release of PMI data in France and Germany for April.  Investors are looking forward to the release of PMI data this morning in the UK and later today from the U.S.

in Corporate news, Tyman shares rose 33% in the UK after rival Quanex said it agreed to buy the company for $1.1bn. Galp Energia jumped 20% as the company said a well test “potentially” indicates Mopane could be an important commercial find in Namibia. Hydrocarbon in-place estimates are 10bn barrels of oil equivalent or higher.

Associated British Foods reported a significant increase in interim profit, prompting a boost in the interim dividend. The company's pretax profit soared by 37% to GBP 881 million in the 24 weeks ending March 2, compared to GBP 644 million a year earlier. Revenue climbed to GBP 9.73 billion from GBP 9.56 billion. The interim dividend was increased by 46% AB Foods anticipates growth in profitability and cash generation ahead of expectations.

In other news, JD Sports Fashion plans to acquire Hibbett for an enterprise value of USD 1.11 billion, aiming to expand its growth plans in North America.

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