London close: Investors play it safe ahead of G-20

Investors exercised caution heading into the G20 meeting of world leaders in Buenos Aires, Argentina, at the weekend.

London's top-flight index finished down by 0.63% or 44.50 points to 6,994.45, closing at its session lows, as the pound drifted down 0.06% against the dollar to trade at 1.27714 but gained 0.48% versus the single currency to 1.1280.

All eyes were on a dinner between US President Donald Trump and China's Xi Jinping scheduled for Saturday, amid hopes they can come to a truce on trade.

David Cheetham, chief market analyst at XTB, said: "The consensus seems to feel that a breakthrough is unlikely but Trump prides himself on his self-proclaimed deal making abilities and may well look to broker an agreement especially considering the recent decline in the stock market which undermines his claims that the rally since he took office is a result of his policies."

Meanwhile, on home shores, Brexit remained very much in focus ahead of the House of Commons vote on the deal on 11 December.

Overnight there were reports of groups in Westminster trying to gather support for a compromise deal based on membership of the European Economic Area and a negotiated customs union, believing it would be only version of Brexit that could attract enough Labour and Tory votes to deliver a parliamentary majority. But Theresa May repeated her rejection of such a 'Norway plus' Brexit as it would mean the continuation of freedom of movement.

Housebuilders were under pressure after the latest survey from Nationwide revealed an uptick in annual house price growth in November but with prices still fairly subdued and the outlook less than rosy. Taylor Wimpey, Barratt Developments, Berkeley Group and Persimmon were all weaker.

House prices were up 0.3% on the month, beating expectations for a 0.1% increase and compared to no growth in September. On the year, house prices were 1.9% higher, up from 1.6% growth the month before and beating expectations for 1.7% growth.

Nationwide's chief economist Robert Gardner said that although the annual rise of 1.9% was up on the previous month, it was still "relatively subdued".

"Looking forward, much will depend on how broader economic conditions evolve. In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows," he said.

Howard Archer, chief economic advisor to the EY Item Club, said the housing market is likely to remain "stuck in low gear" over the coming months.

"Although there are varying performances across regions with the overall national picture dragged down by the poor performance in London and parts of the South East. Consequently, we expect that overall house price gains across the UK over 2019 will be limited to around 2.0%, similar to the likely outturn close to 2.0% in 2018. If the UK leaves the EU in March without a Brexit “deal”, house prices may fall modestly in 2019."

Miners were also on the back foot after data showed that China's manufacturing sector stalled in November for the first time in two years. The official purchasing managers' index fell to 50 this month, coming in below October's 50.2 and expectations, right at the level that separates contraction from expansion.

Antofagasta, Anglo American and Glencore all traded lower.

Elsewhere, engineer Babcock slipped after saying it had won a £100m 10-year contract for aerial firefighting by the government of Manitoba, Canada. This is the first firefighting work the group has won outside of Europe and will start in April 2019.

Shire reversed early losses after it said that its injectable treatment for hereditary angioedema has been cleared for launch in European, having enjoyed early success in the US.

In broker note action, Sage was hit by a downgrade to 'neutral' at Goldman Sachs, while BTG was downgraded to 'hold' at Jefferies and Thomas Cook was cut to 'sell' at Berenberg. Cobham was lifted to 'hold' at SocGen.

Market Movers

FTSE 100 (UKX) 6,980.24 -0.83%
FTSE 250 (MCX) 18,480.83 -0.69%
techMARK (TASX) 3,496.26 0.04%

FTSE 100 - Risers

GlaxoSmithKline (GSK) 1,621.60p 1.50%
Centrica (CNA) 137.75p 1.18%
Shire Plc (SHP) 4,550.00p 1.00%
Vodafone Group (VOD) 168.94p 0.70%
RSA Insurance Group (RSA) 542.60p 0.52%
Experian (EXPN) 1,906.50p 0.50%
Compass Group (CPG) 1,678.50p 0.48%
Direct Line Insurance Group (DLG) 328.00p 0.34%
Pearson (PSON) 963.40p 0.25%
Rolls-Royce Holdings (RR.) 849.60p 0.24%

FTSE 100 - Fallers

NMC Health (NMC) 3,298.00p -6.89%
TUI AG Reg Shs (DI) (TUI) 1,117.00p -6.61%
Antofagasta (ANTO) 800.40p -4.30%
Melrose Industries (MRO) 176.60p -4.23%
Sage Group (SGE) 581.40p -4.06%
ITV (ITV) 145.07p -3.46%
Persimmon (PSN) 1,900.00p -3.33%
Marks & Spencer Group (MKS) 292.70p -3.30%
Taylor Wimpey (TW.) 134.00p -3.28%
Next (NXT) 4,901.00p -3.14%

FTSE 250 - Risers

Go-Ahead Group (GOG) 1,724.00p 4.11%
On The Beach Group (OTB) 418.00p 3.72%
Rank Group (RNK) 159.00p 3.52%
TI Fluid Systems (TIFS) 191.90p 3.39%
Plus500 Ltd (DI) (PLUS) 1,515.00p 3.27%
IntegraFin Holding (IHP) 304.75p 2.90%
Greene King (GNK) 549.20p 2.54%
Millennium & Copthorne Hotels (MLC) 471.50p 2.39%
Spirent Communications (SPT) 129.00p 2.37%
SSP Group (SSPG) 626.30p 2.05%

FTSE 250 - Fallers

Kier Group (KIE) 505.00p -32.49%
Thomas Cook Group (TCG) 30.10p -10.63%
Balfour Beatty (BBY) 251.00p -6.13%
Capita (CPI) 103.30p -5.49%
Spire Healthcare Group (SPI) 124.20p -4.68%
Keller Group (KLR) 586.00p -4.56%
Quilter (QLT) 116.10p -4.37%
Amigo Holdings (AMGO) 253.20p -3.80%
Ibstock (IBST) 213.40p -3.79%
Equiniti Group (EQN) 226.50p -3.62%