London midday: Footsie treading lower as pound picks up on Brexit talk

London stocks pared some of their early losses by midday on Friday, having retreated fairly sharply from a record close the previous day as the pound climbed on rumours about the Brexit negotiations.

The FTSE 100 was just over 20 points or 0.27% to 7,535.78 a few minutes after noon, while the less overseas-focused FTSE 250 index was in positive territory, up 0.08% at 20,267.58.

Sterling was extending its rebound from the start of the week, excepting a few lurches lower, after reports that the European Union might discuss offering the UK a two-year extension of its single market membership following Brexit.

The EU's chief Brexit negotiator, Michel Barnier, was intending to table this proposal at a meeting of EU ambassadors on Friday.

Recovering from a low of just over 1.30 at the end of last week, the pound was up 0.2% against the US dollar to 1.3294 and 0.3% higher versus the euro at 1.1245.

Activity was fairly quiet, said analyst Connor Campbell at Spreadex, due to the impending afternoon’s big-ticket US economic calendar.

"Though a December rate hike seems pretty locked-on, there is still a slither of doubt due to the state of US inflation," he said, with September’s reading looking set to ease those concerns and potentially put a rocket up the dollar.

Economists expect the consumer price index to rise to an eight-month peak of 0.6% from 0.4% a month earlier, while a huge bounce in retail sales is forecast to 1.7% from -0.2% in August alongside a similar jump to 0.9% from 0.2% for the core figure.

"The CPI figures would arrive amid a debate around the most probable policy path for the US central bank in 2018, with some - albeit admittedly only a few - economists of the belief that central bankers around the world may need to revisit their models in order to better take into account globalisation's impact on levels of domestic inflation, among other factors," Campbell said.

CORPORATE NEWS

Miners, led by Anglo American, Rio Tinto, Glencore and Rio Tinto, were among the strong performers in London thanks to the latest Chinese trade numbers revealing a pick-up in export growth from a 6.9% year-on-year clip in August to 9.0% for September, ahead of the 10.9% consensus. Similarly, import demand was stronger than anticipated, rising by 19.5% on the year versus a consensus of 16.5% and up from 14.4%.

"Today’s figures suggest that not only has strong foreign demand continued to prop up manufacturing activity in China but domestic demand remains resilient too," said Julian Evans-Pritchard at Capital Economics.

Financial stocks were also prominent adorned in green, with upbeat trading news driving the gains.

After plunging, plummeting and plunking around 70% since its first of two profit warnings over the summer, Provident Financial was mounting a mini revival as it claimed to be staunching the blood flow at its doorstep lending business. For the full year the sub-prime lender still expects to make losses of £80-120m before exceptional costs from the home credit business but said organisation changes "have prevented any further deterioration in performance". Analysts said it had a lot to do before it was out of the woods.

Ashmore, the emerging markets-focused fund manager, was also on the front foot as it revealed AIM had increased $6.3bn to $65bn during the first quarter, including positive investment performance of $2.3bn and net inflows of $4.3bn.$65bn

Hedge fund manager Man Group was far from blue after reporting solid growth in its funds under management, with the total standing at $103.5bn as at 30 September compared to $95.9bn on 30 June. The FTSE 250 investment management business said net inflows in the third quarter totalled $2.8bn, which were driven by “strong inflows” into alternative risk premia and emerging market debt strategies.

Bottom of the ladder was engineer GKN as it warned full-year profits before tax will be only slightly higher on the prior year's as a result of two significant "commercially sensitive" external claims, together with continuing headwinds at its North American aerospace arm that are expected to drag on the group's trading margin.

TalkTalk led the fallers on the mid-cap the index after it received a downgrade to ‘equal weight’ from ‘overweight’ by analysts at Barclays, forecasting stalling earnings for the first half of the year.

Likewise, Renewi was following close behind after Credit Suisse downgraded its rating on the former Shanks Group, as the shares were felt to be pretty much up with events after the strong gains since its merger with Van Gansewinkel.

Renewi has delivered around a 59% total shareholder return since reports of the VGG merger in May 2016, with the deal completing in February this year and synergies of €40m from the merger now priced-in.

Aviva was very slightly in the green after it agreed to sell its entire 49% shareholding in its joint venture in Taiwan, First Aviva Life, though the transaction had a “negligible impact” on Aviva's IFRS net assets, Solvency II capital position and IFRS operating profit.

Market Movers

FTSE 100 (UKX) 7,535.74 -0.27%
FTSE 250 (MCX) 20,269.40 0.09%
techMARK (TASX) 3,555.38 -0.25%

FTSE 100 - Risers

Pearson (PSON) 637.00p 2.41%
Kingfisher (KGF) 310.20p 2.07%
Rio Tinto (RIO) 3,638.00p 1.59%
Johnson Matthey (JMAT) 3,452.00p 1.29%
Glencore (GLEN) 372.05p 1.11%
Taylor Wimpey (TW.) 202.70p 1.10%
BHP Billiton (BLT) 1,389.50p 1.02%
G4S (GFS) 281.60p 1.00%
Barratt Developments (BDEV) 677.50p 0.89%
Marks & Spencer Group (MKS) 352.20p 0.63%

FTSE 100 - Fallers

GKN (GKN) 325.70p -7.68%
Experian (EXPN) 1,531.00p -2.11%
Standard Chartered (STAN) 744.60p -1.83%
Mondi (MNDI) 1,911.00p -1.75%
easyJet (EZJ) 1,300.00p -1.59%
Bunzl (BNZL) 2,286.00p -1.34%
Centrica (CNA) 176.70p -1.28%
Merlin Entertainments (MERL) 454.00p -1.24%
Relx plc (REL) 1,680.00p -1.06%
NMC Health (NMC) 2,922.00p -1.02%

FTSE 250 - Risers

Provident Financial (PFG) 874.50p 10.84%
Ashmore Group (ASHM) 378.00p 7.02%
Man Group (EMG) 187.20p 4.00%
Aldermore Group (ALD) 265.90p 3.87%
Brown (N.) Group (BWNG) 340.80p 3.05%
Capita (CPI) 567.50p 2.16%
Travis Perkins (TPK) 1,471.00p 2.01%
Ascential (ASCL) 352.80p 1.99%
Elementis (ELM) 277.90p 1.87%
Aggreko (AGK) 895.00p 1.76%

FTSE 250 - Fallers

TalkTalk Telecom Group (TALK) 205.70p -5.64%
Senior (SNR) 281.30p -3.27%
Renewi (RWI) 101.00p -3.26%
UK Commercial Property Trust (UKCM) 86.95p -2.08%
Inmarsat (ISAT) 635.00p -1.85%
IWG (IWG) 326.80p -1.68%
Wood Group (John) (WG.) 711.00p -1.52%
JPMorgan American Inv Trust (JAM) 386.50p -1.35%
Electrocomponents (ECM) 699.50p -1.34%
Smith (DS) (SMDS) 480.20p -1.29%