London close: Stocks flat as traders wait on US Fed

London stocks were little changed on Wednesday as investors digested some mixed UK jobs data and looked ahead to the latest policy announcement from the Federal Reserve.

The FTSE 100 finished down by 0.05% at 7,496.51, while the pound was up 0.10% against the euro at 1.1353 and 0.25% firmer versus the dollar at 1.3358.

UK wage growth is picking up slightly but still remains well short of inflation, while the number of people claiming unemployment benefit reached a five-month high.

Moreover, there were 56,000 fewer people in work between August and October, the largest drop since spring 2015 and larger than the consensus expectation, while the net outflow from employment of 44,000 from July to September was the worst since 2011.

The headline ILO unemployment rate for the three months to October remained at 4.3%, due to a rise in inactivity, while the market had been expecting it to fall to 4.2%.

More timely data from November showed that 5,900 more people made jobless claims, with a claimant count of 2.3%.

On the upside, average weekly earnings for the three months to October were 2.5% higher than the same period last year, which economists had expected, while figures from a month earlier were revised up to 2.3% from 2.2%.

Stripping out bonuses, weekly earnings were up 2.3%, which was better than the 2.2% at which the market had expected it to remain. However, for the single month of October, annualised month-to-month wage growth declined to just 1.1%, below the 2.7% average of the previous nine months.

Wage growth continues to lag inflation, with consumer price inflation revealed a day earlier to have risen to 3.1% in November from the 3.0% in October, continuing the long run of negative real income growth that has squeezed UK households all year.

Economist Sam Tombs at Pantheon Macroeconomics said: "This is a weak report that will strengthen the hands of the doves on the MPC seeking a long pause before the next rate hike. Employment was 56K, or 0.2%, lower in the three months to October than in the three months to July.

"The unemployment rate was stable only because the workforce also contracted by 0.2%. In addition, temporary employment rose by 3K, and the proportion of temporary workers that could not find a permanent role jumped to 28.0% in the three months to October, from 26.7% in the previous three months."

The Fed will make its rate announcement at 1900 GMT amid expectations the US central bank will hike rates for the third time this year by 25 basis points, following increases in March and June. The press conference at 1930 GMT will be Janet Yellen's last as Fed Chair.

In corporate news, Serco surged after saying it expects underlying trading profit for 2017 to be at the top end of its previous guidance.

Dixons Carphone rallied as it pledged to simplify its mobile business as profits slumped in the first half, but the retailer clung onto its market share and said it intends to maintain its interim dividend.

Essentra was a little higher as it announced the acquisition of Micro Plastics for an undisclosed cash consideration while Intertek up after buying US-based security certification solutions provider Acumen Security for an undisclosed consideration.

Wood Group was in the red after saying proforma earnings before interest, tax, depreciation and amortisation will be in the region of $590m to $610m.

TUI Group reversed earlier gains after it saying it expects to achieve at least 10% earnings growth in 2018 after reporting a healthy increase for last year, while British American Tobacco nudged lower after saying it is continuing to perform well, in line with expectations.

On the broker note front, Ashmore was lifted by upgrade to 'neutral' at JPMorgan, while NEX was boosted by an upgrade to 'overweight' from the same outfit.

Equipment rental firm Ashtead was down on the back of a downgrade to 'neutral' from Citigroup, which cited valuation, while Berkeley Group and Sports Direct were hit by downgrades to 'hold' at Jefferies.

Market Movers

FTSE 100 (UKX) 7,496.51 -0.05%
FTSE 250 (MCX) 20,061.40 -0.06%
techMARK (TASX) 3,479.13 -0.13%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 1,693.00p 4.44%
Glencore (GLEN) 354.00p 1.89%
BAE Systems (BA.) 565.50p 1.80%
Barclays (BARC) 203.80p 1.60%
Intertek Group (ITRK) 5,110.00p 1.59%
Schroders (SDR) 3,485.00p 1.57%
HSBC Holdings (HSBA) 768.80p 1.55%
Sainsbury (J) (SBRY) 238.10p 1.49%
Paddy Power Betfair (PPB) 8,570.00p 1.48%
Compass Group (CPG) 1,532.00p 1.46%

FTSE 100 - Fallers

Ashtead Group (AHT) 1,949.00p -5.39%
Centrica (CNA) 139.50p -3.66%
Shire Plc (SHP) 3,677.50p -2.21%
Aviva (AV.) 501.50p -2.05%
Severn Trent (SVT) 2,086.00p -1.60%
United Utilities Group (UU.) 811.50p -1.52%
Convatec Group (CTEC) 209.30p -1.41%
Imperial Brands (IMB) 3,067.50p -1.18%
National Grid (NG.) 874.40p -1.12%
BP (BP.) 505.40p -1.10%

FTSE 250 - Risers

Dixons Carphone (DC.) 181.60p 8.48%
Serco Group (SRP) 101.40p 6.35%
Provident Financial (PFG) 840.50p 4.93%
Dignity (DTY) 1,676.00p 4.68%
Restaurant Group (RTN) 287.70p 3.94%
Diploma (DPLM) 1,184.00p 3.57%
Rathbone Brothers (RAT) 2,555.00p 2.98%
3i Infrastructure (3IN) 203.10p 2.48%
Safestore Holdings (SAFE) 480.50p 2.44%
Rightmove (RMV) 4,373.00p 2.39%

FTSE 250 - Fallers

Wood Group (John) (WG.) 629.50p -7.29%
Sirius Minerals (SXX) 23.40p -4.06%
Telecom Plus (TEP) 1,139.00p -3.39%
AA (AA.) 151.70p -3.38%
Homeserve (HSV) 783.50p -3.21%
Cairn Energy (CNE) 210.80p -3.04%
IP Group (IPO) 143.20p -2.98%
Woodford Patient Capital Trust (WPCT) 82.00p -2.90%
Ocado Group (OCDO) 341.60p -2.65%
Tullow Oil (TLW) 190.00p -2.51%