London close: Stocks end higher as pound extends weakness

London stocks had reversed course to trade modestly higher by the close on Tuesday, helped by the pound, which slipped back after data revealed that UK construction activity last month declined for the first time in a year.

The FTSE 100 was up 0.39% to 7,468.11, while the pound was down 0.23% versus the dollar at 1.3244.

According to the Markit/CIPS survey of the construction industry, client confidence is "fragile" and a lack of new infrastructure projects is hitting new business volumes.

The construction purchasing managers' index for September fell to 48.1 from the previous month's 51.1, with the consensus forecast expecting a smaller drop to 50.8.

Following on from a softer manufacturing survey announced a day earlier, the weak construction data points to continued lacklustre UK economic growth for the third quarter.

Economists said recent construction PMI surveys indicated that the 0.5% quarter-on-quarter fall in the official measure of construction output in the second quarter will be repeated in the third.

Oanda analyst Craig Erlam said: "The pound is coming under pressure once again on Tuesday following another disappointing PMI survey, this time showing an unexpected contraction in the construction industry, the first since shortly after the Brexit vote. With both PMIs having disappointing so far this week, we’re now looking towards the most important of the three, the services PMI, tomorrow to complete the hat-trick.

"The pound may remain volatile over the next couple of days as the Conservative party conference continues in Manchester. With a number of ministers due to speak today including Brexit secretary David Davis and Boris Johnson – a constant thorn in the side of Prime Minister Theresa May – it could be an interesting couple of days for the pound. Johnson’s speech in particular will be of interest given his persistent undermining of May when it comes to Brexit and his clear desire to replace her before the next election."

In corporate news, Ferguson, formerly Wolseley, was in the black as it proposed a final dividend of 73.33p and announced a £500m share buyback, after a year of strong profits growth.

Bakery chain Greggs was also on the front foot after it reported solid third quarter growth, with total sales up 8.6% for the 13 weeks to 30 September, and company-managed shop like-for-like sales up 5.0%.

Electrocomponents gained ground after it reported a 13% rise in first-half revenues and upgraded its profit forecast.

Tesco also racked up solid gains ahead of its interim results on Wednesday amid hopes it will reinstate dividends.

Great Portland Estates edged higher after saying it signed 17 new lettings in the second quarter with a combined annual rent of £5.3m.

Airlines were in focus again, with beleaguered budget carrier Ryanair flying higher as it posted a 10% jump in traffic for September despite recent cancellations. Central and Eastern Europe-focused low-cost carrier Wizz Air was also higher as it reported a 26% jump in passenger numbers in September and said the load factor ticked higher. Both airlines put in a solid performance on Monday on the back of Monarch's collapse.

Shares in Coca‑Cola HBC fell after it announced the passing of its chief executive Dimitris Lois.

Advertising giant WPP retreated after Morgan Stanley placed 22.5m shares in the company on behalf of Bain Capital at 1,350p.

Britvic finished higher after saying it plans to close its plant in Norwich and transfer production of Robinsons and Fruit Shoot to its manufacturing sites in East London, Leeds and Rugby, in a move that will affect 242 employees.

BAE Systems was weaker as Berenberg cut the stock to 'hold', but Anglo American was boosted by an upgrade to 'buy' at HSBC.

Market Movers

FTSE 100 (UKX) 7,468.11 0.39%
FTSE 250 (MCX) 20,035.35 0.39%
techMARK (TASX) 3,519.46 -0.10%

FTSE 100 - Risers

Ferguson (FERG) 5,045.00p 4.03%
Ashtead Group (AHT) 1,851.00p 3.29%
Sainsbury (J) (SBRY) 247.50p 3.25%
International Consolidated Airlines Group SA (CDI) (IAG) 622.50p 2.47%
Anglo American (AAL) 1,397.00p 2.46%
Standard Chartered (STAN) 771.30p 2.13%
Rolls-Royce Holdings (RR.) 921.00p 1.99%
Sage Group (SGE) 723.00p 1.83%
Tesco (TSCO) 190.60p 1.82%
Associated British Foods (ABF) 3,266.00p 1.81%

FTSE 100 - Fallers

Admiral Group (ADM) 1,784.00p -2.73%
WPP (WPP) 1,364.00p -2.08%
BAE Systems (BA.) 620.50p -1.67%
Shire Plc (SHP) 3,852.00p -1.46%
Coca-Cola HBC AG (CDI) (CCH) 2,519.00p -1.41%
BT Group (BT.A) 279.35p -1.34%
Pearson (PSON) 608.00p -1.22%
Micro Focus International (MCRO) 2,388.00p -1.12%
Centrica (CNA) 190.90p -1.09%
Prudential (PRU) 1,788.50p -1.08%

FTSE 250 - Risers

Provident Financial (PFG) 904.00p 7.62%
Electrocomponents (ECM) 673.00p 5.40%
Tullow Oil (TLW) 186.20p 3.79%
Coats Group (COA) 80.05p 3.56%
Evraz (EVR) 320.20p 3.09%
Wood Group (John) (WG.) 695.00p 2.96%
IP Group (IPO) 144.80p 2.91%
Wizz Air Holdings (WIZZ) 3,084.00p 2.80%
Amec Foster Wheeler (AMFW) 520.00p 2.77%
Ferrexpo (FXPO) 302.20p 2.75%

FTSE 250 - Fallers

Morgan Advanced Materials (MGAM) 306.70p -2.63%
Saga (SAGA) 196.00p -2.24%
Halfords Group (HFD) 343.40p -2.08%
Lancashire Holdings Limited (LRE) 658.00p -2.01%
Nostrum Oil & Gas (NOG) 404.00p -1.94%
Polypipe Group (PLP) 417.60p -1.88%
Just Group (JUST) 142.50p -1.59%
Euromoney Institutional Investor (ERM) 1,130.00p -1.57%
Auto Trader Group (AUTO) 389.40p -1.44%
Countryside Properties (CSP) 348.50p -1.41%