London close: Sterling strength saps stocks

London's top flight index sagged a little as France's Prime Minister, Emmanuel Macron held out the possibility of a bespoke trading arrangement for the UK after Brexit, boosting the value of the pound, and with bookmakers under the cosh amid speculation the government is planning a £2 maximum stake on betting machines.

The FTSE 100 ended the session down by 0.20% at 7,715.44, while the pound was up 0.58% versus the dollar at 1.3944 and by another 0.50% against the euro at 1.1397.

In parallel, the second-tier index edged up by 0.01% to 20,655.17.

Nonetheless, in remarks made on The Andrew Marr Show, Macron added that "by definition" the future relationship between the UK and the EU would be weaker than it had been, given that the deepest possible relation was with both nations being member states of the European Union.

"As you decided to leave, you cannot be part of the single market. But in function of the nature of the negotiation, you can have some deeper relations and some others. For instance, we have a deeper relation with Norway than the one we have with Canada," Macron said.

The US government shutdown was also a big focus as a Sunday session of the Senate failed to yield any kind of agreement between the Democrats and Republicans, after lawmakers failed to agree on a spending bill by the deadline last Friday.

With a vote to end the shutdown postponed until 1700 GMT on Monday, many federal government offices were forced to remain shut.

Yet as Mickey Levy at Berenberg Capital Markets observed in a research note sent to clients, "temporary shutdowns have occurred numerous times in the past, most recently in 2013. Close observation suggests that they have little impact on trends in economic conditions, interest rates, the stock market, or even the US dollar. They also have little impact on the wide array of government operations."

In corporate news, bookies William Hill and Ladbrokes Coral, and GVC Holdings were all sharply lower following reports over the weekend that the UK is set to announce a new £2 maximum stake on high stakes gaming machines.

Defence contractor GKN fell. Having rejected a £7bn hostile bid from Melrose Industries last week, the engineer sought to highlight its potential as a standalone entity, lifted sales forecasts for its electric driveline business in 2020 to £275m from previous forecasts of £200m.

Another engineer Smiths Group edged down as agreed to sell its John Crane's bearings business to private Austrian company Miba AG for an enterprise value of $35m.

Construction contractor Kier Group declined after confirming it has taken over the HS2 and Highways England smart motorway projects from collapsed Carillion and announcing other contract wins.

IMI was weaker after it said that Peter Spencer, the managing director of its IMI Hydronic Engineering, was leaving the group.

On the upside, however, Ocado surged after signing its second major international customer less than two months after the first, with a contract to build a customer fulfilment centre for Canada's second largest supermarket group.

Shire was on the front foot, boosted by news that French healthcare group Sanofi has agreed to buy US haemophilia specialist Bioverativ for $11.6bn.

UAE-based private healthcare operator NMC Health was in the black after announcing two earnings-accretive acquisitions in the UAE and Kingdom of Saudi Arabia.

FTSE 100 catering company Compass was higher after it said that changes to the US tax system will cut its effective tax rate from 26.5% to around 24%.

Dixons Carphone rallied after it narrowed its full-year profit guidance and reported a 4% jump in year-on-year for the 10 weeks to 6 January, as it announced the appointment of Alex Baldock as its new chief executive.

Computacenter was also in the black after saying 2017 adjusted pre-tax results are likely to beat analysts' expectations.

Market Movers

FTSE 100 (UKX) 7,715.44 -0.20%
FTSE 250 (MCX) 20,655.17 0.01%
techMARK (TASX) 3,520.17 0.10%

FTSE 100 - Risers

Barclays (BARC) 209.20p 4.34%
NMC Health (NMC) 3,360.00p 2.44%
Anglo American (AAL) 1,792.20p 2.06%
Shire Plc (SHP) 3,511.00p 1.44%
CRH (CRH) 2,716.00p 1.23%
BP (BP.) 515.80p 1.16%
Marks & Spencer Group (MKS) 307.50p 1.15%
BT Group (BT.A) 266.30p 0.83%
Vodafone Group (VOD) 226.90p 0.69%
Centrica (CNA) 140.00p 0.68%

FTSE 100 - Fallers

Rentokil Initial (RTO) 306.70p -2.97%
Relx plc (REL) 1,601.00p -2.64%
Paddy Power Betfair (PPB) 8,275.00p -2.07%
Rolls-Royce Holdings (RR.) 874.80p -1.93%
Berkeley Group Holdings (The) (BKG) 4,140.00p -1.92%
Barratt Developments (BDEV) 601.00p -1.92%
Carnival (CCL) 4,881.00p -1.89%
Bunzl (BNZL) 1,990.50p -1.85%
WPP (WPP) 1,356.00p -1.81%
Smith (DS) (SMDS) 501.40p -1.80%

FTSE 250 - Risers

Ocado Group (OCDO) 526.60p 27.51%
Dixons Carphone (DC.) 200.80p 6.84%
Aveva Group (AVV) 3,054.00p 5.24%
Daejan Holdings (DJAN) 6,310.00p 4.64%
Pagegroup (PAGE) 555.00p 4.32%
Virgin Money Holdings (UK) (VM.) 287.10p 4.24%
CLS Holdings (CLI) 240.50p 3.83%
Brown (N.) Group (BWNG) 278.80p 3.49%
Millennium & Copthorne Hotels (MLC) 564.00p 3.49%
St. Modwen Properties (SMP) 416.00p 3.48%

FTSE 250 - Fallers

William Hill (WMH) 297.20p -11.63%
Ladbrokes Coral Group (LCL) 168.00p -7.92%
Hochschild Mining (HOC) 236.90p -3.27%
Cobham (COB) 131.50p -2.92%
Meggitt (MGGT) 473.00p -2.66%
IMI (IMI) 1,367.00p -2.56%
Intermediate Capital Group (ICP) 1,097.00p -2.23%
UBM (UBM) 879.00p -2.22%
Diploma (DPLM) 1,190.00p -2.22%
Bellway (BWY) 3,444.00p -2.19%