London midday: Stocks drop as pound ticks higher; utilities buck the trend on Citi note

London stocks had fallen into the red by midday on Wednesday as the pound was lifted by news of a possible extension to Brexit negotiations.

The FTSE 100 was down 0.7% to 7,567.73, while the pound was 0.1% higher against the dollar at 1.2890 and 0.3% firmer versus the euro at 1.1046 following a report that the deadline for Brexit talks has been pushed back again. According to Bloomberg, senior officials on both sides are now aiming to finalise the terms of the divorce by the middle of November, rather than the 18 October deadline.

A weaker pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Brexit minister Dominic Raab is due to give a speech at 1400 BST at an EU committee in the upper house of parliament.

Meanwhile, investors were continuing to digest the preliminary trade deal struck by the US and Mexico, with attention now turning to Canada.

Oanda analyst Craig Erlam said: "With NAFTA negotiations finally making progress, there is a sense of relief that the risk of a global trade war is easing, which has been supportive for sentiment recently. There is still a long way to go with Trump recently again threatening tariffs on cars from Europe and the US preparing another $200 billion of tariffs against China but any progress is welcome and it’s hopefully something we’ll see more of in the months ahead.

"The Canadian dollar has gained ground in recent days on reports that it is re-joining talks and offering concessions that could result in an agreement by the end of the week. Trump had previously threatened to proceed with a US-Mexico trade agreement as a replacement for NAFTA, in effect cutting Canada out, which could have had a significant impact on the Canadian economy. While this was more than likely a bluff aimed at forcing the hand of the Canadians, it is a relief that no such move will likely be necessarily as it would have been harmful for all concerned."

The stronger dollar weighed on commodities, with the likes of Antofagasta and Anglo American in the red.

Elsewhere, listed infrastructure investment firm HICL Infrastructure slipped as it entered into an agreement to sell its 9.7% interest in the AquaSure Desalination PPP Project.

Diploma gained as it said chief executive Richard Ingram has left the technical equipment supplier after less than four months in the job. The company also said it was trading solidly and on track to meet expectations for annual profit.

Bunzl was the biggest riser a day after releasing solid first-half results and announcing its first acquisition in Norway.

GVC Holdings rallied after Morgan Stanley initiated coverage of the stock at 'overweight'. It said cross-selling, mobile catch-up and greater geographic diversification will keep growth above peers.

Micro Focus rose after announcing the start of a share buy-back programme with an initial tranche of up to $200m, while James Fisher advanced after it posted a 20% increase in first-half profit.

Utilities were in focus as Citi said that after several years of exuberant prices, the table has turned in the face of political, regulatory and macro risks, with United Utilities and Centrica both higher as it highlighted them as top picks.

"While we expect a turbulent ride in the months ahead given the uncertainties of Brexit and questions over the stability of the current UK government, we cannot ignore the fact that we are starting to see fundamental value," the bank said.

Oilfield services provider Petrofac rose after saying it swung to a net loss in the first half and announcing the provisional award of an engineering, procurement and construction contract worth $600m with Algeria’s Sonatrach.

Capital & Regional and Intu were both initiated at ‘buy’ at Berenberg, while Chemring was started at ‘market perform’ by Raymond James.

Market Movers

FTSE 100 (UKX) 7,567.73 -0.65%
FTSE 250 (MCX) 20,741.53 -0.52%
techMARK (TASX) 3,562.66 -0.43%

FTSE 100 - Risers

Bunzl (BNZL) 2,373.00p 2.06%
GVC Holdings (GVC) 1,120.00p 1.73%
Micro Focus International (MCRO) 1,303.50p 1.68%
CRH (CRH) 2,641.00p 1.30%
United Utilities Group (UU.) 726.40p 1.11%
Experian (EXPN) 1,945.00p 1.04%
Associated British Foods (ABF) 2,305.00p 0.83%
SEGRO (SGRO) 663.00p 0.73%
Centrica (CNA) 142.90p 0.67%
London Stock Exchange Group (LSE) 4,621.00p 0.52%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 321.00p -2.61%
Fresnillo (FRES) 933.40p -2.55%
Royal Mail (RMG) 468.90p -2.23%
Standard Chartered (STAN) 638.40p -2.16%
Antofagasta (ANTO) 829.20p -2.15%
Tesco (TSCO) 253.10p -1.98%
Ocado Group (OCDO) 1,050.00p -1.96%
Anglo American (AAL) 1,600.60p -1.59%
Royal Dutch Shell 'B' (RDSB) 2,578.00p -1.53%
BT Group (BT.A) 221.34p -1.52%

FTSE 250 - Risers

Syncona Limited NPV (SYNC) 280.50p 5.65%
TI Fluid Systems (TIFS) 291.80p 3.77%
Fisher (James) & Sons (FSJ) 1,832.00p 2.69%
Diploma (DPLM) 1,400.00p 2.56%
Victrex plc (VCT) 3,234.00p 2.08%
Petrofac Ltd. (PFC) 670.60p 1.61%
Jupiter European Opportunities Trust (JEO) 898.78p 1.44%
Clarkson (CKN) 2,815.00p 1.44%
Games Workshop Group (GAW) 3,624.90p 1.40%
Intermediate Capital Group (ICP) 1,040.29p 1.39%

FTSE 250 - Fallers

McCarthy & Stone (MCS) 109.01p -3.87%
Euromoney Institutional Investor (ERM) 1,286.00p -3.45%
Travis Perkins (TPK) 1,115.50p -3.34%
Metro Bank (MTRO) 2,830.00p -3.21%
FirstGroup (FGP) 86.35p -3.09%
Dixons Carphone (DC.) 165.35p -2.94%
RPC Group (RPC) 737.60p -2.82%
Wood Group (John) (WG.) 759.80p -2.81%
Galliford Try (GFRD) 965.50p -2.57%
Premier Oil (PMO) 117.50p -2.57%