London midday: FTSE maintains gains ahead of payrolls

London stocks were still a little higher by midday on Friday as investors mulled better-than-expected Chinese manufacturing figures and looked ahead to the release of the latest US non-farm payrolls report.

The FTSE 100 was 0.2% higher at 7,264.33, while the pound was up 0.1% against the dollar and the euro at 1.2959 and 1.1615, respectively.

Data out of China earlier helped to underpin sentiment as it showed manufacturing activity expanded at its fastest pace in nearly three years in October.

The Caixin/Markit purchasing managers' index for the sector printed at 51.7 in October compared to 51.4 in September, beating expectations for a reading of 51.0. This marked the highest level since February 2017.

The mood was also lifted by comments from US President Donald Trump, who said on Thursday that the US and China were working on a new site for the two counties to sign a 'phase one' trade deal following the cancellation of a summit in Chile.

On home shores, the latest survey from Markit/CIPS showed that the decline in UK manufacturing activity slowed in October amid a rush to stockpile ahead of the Brexit deadline, but the sector remained on course for a recession.

The manufacturing purchasing managers' index ticked up to 49.6 in October month from 48.3 in September, beating expectations for a reading of 48.1 and hitting a six-month high. However, even with the boost from stockpiling, the PMI remained below the 50.0 mark that separates contraction from expansion for the sixth consecutive month - the longest run in contraction territory since 2012.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said the minor uplift in overall purchasing activity did little to ease "the agony" for manufacturing companies as the sector remained submerged in contraction terrain and heading for recession.

"Business was still restrained by the Brexit leash, as firms were subjected to the struggle against client indecision and also the downpull of a slowing global economy," he said.

"This affected new order intakes which fell for a sixth sequential month as the second Brexit deadline loomed into view. Domestic clients packed up and went home without placing orders, leaving the sector to survive on a handful of stockpiling purchases from clients in the EU."

Ruth Gregory, senior UK economist at Capital Economics, pointed out that even after October’s increase, the PMI is still pointing to fairly steep falls in manufacturing output of around 0.7% quarter-on-quarter at the start of the fourth quarter.

"Overall, then, it looks like the manufacturing sector is back in recession," she said.

Coming up, attention will shift across the pond, where the US non-farm payrolls report, unemployment rate and average earnings figures are due at 1230 GMT.

In corporate news, TP ICAP was a high riser as it posted a 17% jump in third-quarter revenues to £478m and backed its guidance for the year, while Rentokil Initial ticked up after announcing the acquisition of Florida Pest Control.

Homeserve rallied on the back of an upgrade to 'add' at Peel Hunt, while Morgan Advanced Materials was boosted by an upgrade to 'buy' at Citi.

On the downside, Rightmove was hit by a downgrade to 'sell' from 'hold' at Shore Capital, while housebuilder Crest Nicholson was in the red again after a profit warning on Thursday, as UBS downgraded its rating on the stock to 'neutral' from 'buy' arguing that there is not sufficient value in absolute and relative terms.

Car dealership Inchcape and car marketplace Auto Trader were both weaker after Lookers warned that annual profit was set to fall sharply - its second profit warning in less than four months.

Market Movers

FTSE 100 (UKX) 7,264.33 0.22%
FTSE 250 (MCX) 20,060.65 0.20%
techMARK (TASX) 3,940.07 0.15%

FTSE 100 - Risers

London Stock Exchange Group (LSE) 7,120.00p 2.39%
Associated British Foods (ABF) 2,275.00p 2.20%
TUI AG Reg Shs (DI) (TUI) 1,031.00p 2.08%
Flutter Entertainment (FLTR) 8,120.00p 2.04%
Melrose Industries (MRO) 217.10p 1.88%
Smurfit Kappa Group (SKG) 2,610.00p 1.48%
Carnival (CCL) 3,129.00p 1.20%
International Consolidated Airlines Group SA (CDI) (IAG) 537.40p 1.17%
Fresnillo (FRES) 717.00p 0.99%
Taylor Wimpey (TW.) 167.10p 0.97%

FTSE 100 - Fallers

Centrica (CNA) 70.76p -2.48%
Auto Trader Group (AUTO) 548.60p -2.42%
NMC Health (NMC) 2,155.00p -1.28%
Barclays (BARC) 165.66p -1.28%
Hargreaves Lansdown (HL.) 1,749.50p -1.27%
Rightmove (RMV) 591.20p -1.24%
Rolls-Royce Holdings (RR.) 700.60p -1.18%
Ferguson (FERG) 6,524.00p -0.94%
Hiscox Limited (DI) (HSX) 1,476.00p -0.87%
Burberry Group (BRBY) 2,029.00p -0.73%

FTSE 250 - Risers

TP ICAP (TCAP) 365.30p 6.53%
IP Group (IPO) 59.50p 6.25%
Sirius Minerals (SXX) 3.00p 4.38%
Homeserve (HSV) 1,206.00p 4.06%
Riverstone Energy Limited (RSE) 458.45p 3.84%
Sanne Group (SNN) 545.00p 3.22%
Kainos Group (KNOS) 521.57p 2.67%
Morgan Advanced Materials (MGAM) 241.60p 2.55%
Hochschild Mining (HOC) 205.00p 2.40%
Contour Global (GLO) 215.50p 2.38%

FTSE 250 - Fallers

Virgin Money UK (VMUK) 132.20p -3.82%
Inchcape (INCH) 620.50p -3.80%
Crest Nicholson Holdings (CRST) 374.80p -3.50%
Marks & Spencer Group (MKS) 176.01p -3.03%
Micro Focus International (MCRO) 1,031.40p -2.70%
Euromoney Institutional Investor (ERM) 1,374.00p -2.69%
Wood Group (John) (WG.) 331.20p -2.10%
OneSavings Bank (OSB) 352.80p -2.00%
Dixons Carphone (DC.) 128.85p -1.83%
Babcock International Group (BAB) 544.40p -1.73%