Europe midday: Stoxx rises as FTSE hits record high

(Sharecast News) - European markets opened higher on Friday as more upbeat corporate results in the US and talk that mining giants Rio Tinto and Glencore had been in merger talks boosted sentiment. The pan-European Stoxx 600 index was 0.72% at 523 in early deals. Mining stocks were in focus after Bloomberg reported Glencore had been in talks with Rio Tinto to explore a merger that would be the industry's largest.

Britain's FTSE 100 hit a record intra-day high, gaining 1.25% to reach 8,497, before dipping slightly to 8,496.

''The FTSE 100 has caught that Friday feeling, surfing upwards on a wave of enthusiasm, powered by expectations of lower interest rates and a weaker pound. The index jumped in early trade by 1%, cresting past its previous record in May last year," said Hargreaves Lansdown analyst Susannah Streeter.

"The blue-chip index is stuffed with global giants, like miners, which benefit from cheaper sterling, and were among the biggest gainers of the morning. The pound fell to $1.21 after a disappointing snapshot of retail sales showing a contraction for the so-called 'golden quarter', adding to the picture of stagnation for the UK economy."

"But it's provided a tailwind to multinationals and hopes of interest rate cuts from the Bank of England have buoyed investor sentiment."

In economic news, investors will be waiting on eurozone final inflation data for last month. Flash data showed that annual inflation in the euro zone rose to 2.4% in December - the bloc's third consecutive monthly rise.

Elsewhere, retail sales in the UK disappointed, falling unexpectedly fell in December, according to data released on Friday by the Office for National Statistics.

Retail sales declined by 0.3% on the month following a downwardly-revised 0.1% increase in November. Economists were expecting a 0.4% jump.

"This was driven by a very poor month for food sales, which sank to their lowest level since 2013, with supermarkets particularly affected," said ONS senior statistician Hannah Finselbach.

In equity news, shares in Glencore and Rio Tinto were rising on Friday on the back of reports that the two companies have been discussing a potential merger.

According to Bloomberg News, which cited people close to the matter, discussions were at an early stage but it's unclear whether these talks were still ongoing. Sources cited by the Financial Times said the talks were held as recently as October.

Nevertheless, if successful, the tie-up of the two groups would represent the biggest deal in mining history, with Rio Tinto already the world's second-largest miner behind Australian rival BHP.

Stellantis shares gained despite the Fiat owner posting a 9% drop in fourth-quarter shipments.

Smiths Group was also a high riser as US activist investor Engine Capital called on the diversified engineer to explore a breakup.

Ladbrokes owner Entain jumped after William Hill and 888 owner Evoke said that annual core earnings would be at the upper end of guidance and "well above" market expectations after a strong performance in the fourth quarter. Evoke shares surged 10% on the news.

Reporting by Frank Prenesti for Sharecast.com