London close: Stocks pick up as Powell perks up dollar

London stocks perked up late on Tuesday as the pound fell on new Brexit fears ahead of a key parliamentary vote and expectations of rising US interest rates, with the latest UK jobs data seemingly doing little to nudge markets either way.

Having earlier been down 0.2%, the FTSE 100 reversed course to climb 0.3% to 7,626.33 by the close as the pound fell 0.6% against a strengthening dollar to 1.3152 and 0.3% versus the euro to 1.1271.

Ahead of a key Brexit vote for Theresa May later in the evening, sterling's sensitivity to political discord has flared up once again, said market analyst Kathleen Brooks at Capital Index. "GBP is dipping on the back of fears that Theresa May’s government could face defeat in the Commons if Labour sides with pro-European MPs and calls for the UK to remain in the customs union if there is no trade deal with the EU by March next year."

Earlier, after the Electoral Commission reported Vote Leave campaign to the police on the back of “significant evidence” of coordination between two pro-Brexit campaign groups, there were calls in Parliament for a full public inquiry into Vote Leave’s "cheating", calls from Labour for the Brexit result to be declared void and even calls from senior Tory MPs for the Brexit referendum to be re-run. A Cabinet Office minister said the government will continue to implement Brexit referendum result despite the Commission's findings.

The key vote will take place in the Commons at 1800 BST on a customs union amendment tabled by MP Stephen Hammond.

Meanwhile, UK pay growth was shown by the Office for National Statistics to have slowed to its weakest in six months in the three months to May despite record employment figures.

Analyst Connor Campbell at Spreadex said the jobs report "failed to move the needle, with investors seemingly waiting for Wednesday’s inflation reading before making a call on what the Bank of England might do in August".

Pay including bonuses rose at an annual rate of 2.5%. The rate of increase was slightly lower than the 2.6% recorded in the previous two three month periods. Regular pay growth slowed to 2.7% from 2.78% in the previous two periods. Both figures for pay growth were in line with economists’ average forecast.

Wage growth eased even as the number of people in work increased and the number of people unemployed fell. The employment rate rose from 74.9% a year earlier to 75.7% – the highest since comparable records began in 1971.

Ian Stewart, chief economist at Deloitte, said: "Low unemployment is yet to generate serious wage pressures and Brexit uncertainties continue to reign. The case for raising interest rates in August may have strengthened, but is hardly compelling."

Sterling's slump was equally fuelled by a rising dollar ahead of a Congressional testimony from Federal Reserve chairman Jerome Powell, which sent the dollar shooting higher as he called for further rate hikes in the US due to continuing economic strength.

In corporate news, Royal Mail was the standout performers despite a warning that annual addressed letter volumes would decline more than expected due to the impact of the GDPR. But with its shares having lost almost a quarter since mid-May, reassurance that trading in the first quarter was in line with its expectations was well received.

Housebuilder Galliford Try rallied on the back of a solid trading update, taking larger peers Berkeley and Taylor Wimpey up with it.

TalkTalk rallied as it posted a 4.1% jump in first-quarter revenue and said it added 80,000 net broadband customers, taking the total to 4.22m. The company also maintained its full-year guidance for 15% growth in earnings before interest, taxes, depreciation and amortisation.

Dairy Crest gained after the Cathedral City owner maintained its outlook for the year and said trading in the first quarter has been in line with its expectations.

Food outlet operator SSP Group rose after saying it had had a "good" third quarter, with total group revenue up 7.3% at constant currency.

Rio Tinto ticked higher after saying it enjoyed strong second-quarter production across most of its commodities and business units.

Going the other way, British Land retreated as it said the combined impact of administrations and company voluntary arrangements since 1 April 2017 is 1.6% of total group contracted rent, up from 1% at the time of the preliminary results in May.

Hospital operator Spire Healthcare edged down as it announced the appointment of Jitesh Sodha - formerly CFO at De La Rue - as its new chief financial officer.

In broker note action, Greene King was knocked lower after Berenberg reiterated its 'sell' rating on the pub group saying it continues to believe it's a value trap, while underlying trading remains weak.

Stagecoach was upgraded to 'neutral' at Citi, while Morgan Advanced Materials was raised to 'overweight' at JPMorgan. ASOS was lifted to 'buy' by Goldman Sachs but Paddy Power was hit by a downgrade to 'sell' at Investec.

Market Movers

FTSE 100 (UKX) 7,626.33 0.34%
FTSE 250 (MCX) 20,882.07 0.39%
techMARK (TASX) 3,579.88 0.42%

FTSE 100 - Risers

Just Eat (JE.) 870.60p 2.69%
Berkeley Group Holdings (The) (BKG) 3,685.00p 2.53%
3i Group (III) 928.80p 2.18%
Mondi (MNDI) 2,079.00p 2.16%
Antofagasta (ANTO) 957.80p 2.11%
Fresnillo (FRES) 1,117.50p 1.92%
Burberry Group (BRBY) 2,139.00p 1.86%
Micro Focus International (MCRO) 1,264.00p 1.81%
Royal Mail (RMG) 489.50p 1.81%
Rio Tinto (RIO) 4,072.50p 1.71%

FTSE 100 - Fallers

Paddy Power Betfair (PPB) 8,225.00p -3.24%
WPP (WPP) 1,184.00p -2.63%
Barclays (BARC) 188.82p -1.41%
CRH (CRH) 2,680.00p -1.40%
Imperial Brands (IMB) 2,815.00p -1.35%
British American Tobacco (BATS) 3,820.50p -1.34%
Land Securities Group (LAND) 924.30p -1.21%
Centrica (CNA) 155.70p -1.14%
BT Group (BT.A) 219.55p -0.88%
British Land Company (BLND) 646.20p -0.86%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 118.70p 8.01%
Go-Ahead Group (GOG) 1,468.00p 5.76%
Morgan Advanced Materials (MGAM) 357.80p 5.30%
Softcat (SCT) 833.00p 4.78%
Daejan Holdings (DJAN) 6,070.00p 4.30%
Stagecoach Group (SGC) 159.00p 3.99%
Galliford Try (GFRD) 866.50p 3.96%
BTG (BTG) 503.50p 3.94%
Indivior (INDV) 352.00p 3.38%
Dairy Crest Group (DCG) 484.20p 3.33%

FTSE 250 - Fallers

Greene King (GNK) 535.40p -5.81%
Provident Financial (PFG) 628.80p -2.78%
AA (AA.) 116.60p -2.02%
Alfa Financial Software Holdings (ALFA) 166.60p -2.00%
Cineworld Group (CINE) 269.60p -1.96%
Wood Group (John) (WG.) 603.60p -1.76%
Entertainment One Limited (ETO) 377.60p -1.67%
JD Sports Fashion (JD.) 452.20p -1.65%
OneSavings Bank (OSB) 436.00p -1.62%
Premier Oil (PMO) 124.50p -1.58%