London close: Factory data provides fillip for shares

London stocks finished higher on Tuesday as the pound got a small lift from news that UK industrial and manufacturing data improved more than expected in August.

The FTSE 100 was up 0.40% to 7,538.27, while the pound was 0.1% firmer against the euro at 1.1193 but 0.55% firmer versus the dollar at 1.3213.

Total UK industrial production output in August grew 0.2% compared to the previous month, which was in line with the consensus forecast but compared to the same month last year rose 1.6% versus a consensus of 0.9%.

UK manufacturing production output provided most of the industrial growth as it increased 0.4% in August, the Office for National Statistics reported, beating the market's expectation of a 0.2% gain.

Manufacturing rose 2.8% on the year, well ahead of the 1.9% City consensus.

Construction was also better than expected, with output up 0.6% on the previous month versus a forecast flat month, and with output surging 3.5% on the year versus a consensus estimate of 0.2%. However, over the past three months construction was down 0.8% compared the preceding three months.

Meanwhile, the goods trade deficit hit an all-time high of £14.2bn in August, which Spreadex analyst Connor Campbell said "took some of the shine off those production figures".

"Add onto all that jitters surrounding the fifth round of negotiations between the UK and EU, i.e. the last meeting before the latter decides whether sufficient progress has been made to start discussing future trade agreements, and news that the ONS is going to ‘significantly’ downgrade the country’s productivity forecasts, and the pound was a bit inconsistent."

On the corporate front, banks put in a solid performance, with RBS and Lloyds helped higher after ratings upgrades from Credit Suisse, though HSBC was up despite being downgraded.

Centrica finally found a floor as the government's proposal to impose an energy cap begins to be debated in parliament this week. Credit agency S&P said in a note on Tuesday that companies could offset the pressure on cash flow generation from a cap by lowering their operating expenses, capex, or potentially adjusting their financial policy.

Direct Line gained as JPMorgan Cazenove reiterated its 'overweight' rating on the insurer and added it to its European Analyst Focus List.

Whitbread nudged up after announcing that its Costa division has acquired 49% of its South China joint venture from its partner, Yueda, for RMB 310m (£35m).

Outsourcing group Capita rallied as it appointed former Amec Foster Wheeler boss Jon Lewis as chief executive to continue its turnaround, while Domino’s Pizza surged after saying third-quarter sales rose 21%.

Pub operator Marston’s was on the front foot after it said full-year sales and profit were up on last year, although trading over the summer was subdued. Peer Greene King was also trading higher.

Ted Baker ended lower despite reporting a jump in first-half profit and revenue.

Going the other way, BAE Systems was in the red after announcing that it will axe almost 2,000 jobs from its UK workforce as it attempts to keep production “at competitive costs”.

Miner Vedanta Resources was weaker after the release of its second-quarter production results.

Pets at Home suffered heavy losses after former private equity owner KKR sold 61m shares equivalent to a 12% stake in the company.

Market Movers

FTSE 100 (UKX) 7,538.27 0.40%
FTSE 250 (MCX) 20,146.28 0.22%
techMARK (TASX) 3,532.50 -0.22%

FTSE 100 - Risers

Persimmon (PSN) 2,761.00p 2.34%
Burberry Group (BRBY) 1,843.00p 2.22%
Reckitt Benckiser Group (RB.) 7,090.00p 2.19%
Antofagasta (ANTO) 1,002.00p 2.14%
Royal Bank of Scotland Group (RBS) 277.50p 1.95%
Centrica (CNA) 176.10p 1.91%
Barratt Developments (BDEV) 667.50p 1.91%
Carnival (CCL) 5,025.00p 1.76%
SEGRO (SGRO) 542.50p 1.50%
British American Tobacco (BATS) 4,888.50p 1.43%

FTSE 100 - Fallers

Pearson (PSON) 619.50p -1.90%
Sage Group (SGE) 719.50p -1.64%
Johnson Matthey (JMAT) 3,329.00p -1.63%
Smurfit Kappa Group (SKG) 2,277.00p -1.43%
ITV (ITV) 176.30p -0.90%
BT Group (BT.A) 277.05p -0.88%
GKN (GKN) 353.00p -0.84%
DCC (DCC) 7,275.00p -0.82%
Rolls-Royce Holdings (RR.) 912.00p -0.82%
Convatec Group (CTEC) 281.70p -0.81%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 329.40p 8.93%
Telecom Plus (TEP) 1,209.00p 5.85%
Tullow Oil (TLW) 186.00p 4.20%
Greene King (GNK) 540.00p 3.85%
Marston's (MARS) 108.00p 3.75%
Millennium & Copthorne Hotels (MLC) 575.00p 2.68%
Hochschild Mining (HOC) 234.20p 2.32%
Pagegroup (PAGE) 525.50p 2.14%
Aggreko (AGK) 912.00p 2.13%
Mitchells & Butlers (MAB) 249.00p 2.01%

FTSE 250 - Fallers

Provident Financial (PFG) 836.50p -7.87%
Pets at Home Group (PETS) 199.20p -7.74%
Vedanta Resources (VED) 875.00p -3.31%
Evraz (EVR) 311.20p -3.29%
Ferrexpo (FXPO) 274.80p -2.70%
Ted Baker (TED) 2,750.00p -2.48%
Renewi (RWI) 102.00p -2.11%
IP Group (IPO) 132.30p -2.00%
Greencore Group (GNC) 186.70p -1.94%
Dunelm Group (DNLM) 703.50p -1.89%