London midday: FTSE treads water as Labour split creates splash

London stocks remained slightly submerged by midday on Monday after ending last week with a high water mark not seen in four months, with pressure coming from a rise in the pound.

The FTSE 100 index was down almost 14 points or 0.2% to 7,223.05 as sterling rose 0.4% against the dollar to 1.2933 but was pretty much flat versus the euro at 1.1412.

Volumes were down as the Wall Street was closed for the Presidents' Day holiday, but news flow from across the Atlantic still provided a small hand as President Trump reported trade talks in Beijing had been "very productive".

Negotiations between the two economic powers are set to continue in Washington DC.

"An extension looks the most likely outcome, with 90 days just not enough time to reach a comprehensive deal," said market analyst Craig Erlam at Oanda.

"Trump has indicated that he could support an extension despite claiming to like tariffs during his press conference on Friday, something that will comfort investors at a time when global growth concerns are posing a significant risk for markets."

Back in the UK, the resignation of seven Labour Party MPs coincided with a spike in the pound, with some traders drawing conclusions about the potential for a Tory majority in the next election.

The news injected some drama into what is down to be another week of Brexit limbo as Prime Minister Theresa May heads off to Brussels again to try and negotiate some small concessions from the EU ahead of a parliamentary vote on Brexit at the end of the month.

Elsewhere, UK house prices increased at a year-on-year pace of just 0.2% in February, property website Rightmove reported, the slowest rate since 2009. But on a monthly basis, house price growth accelerated to 0.7% from 0.4% previously.

No major economic releases are scheduled in the UK, nor on the Continent.

Oil prices were driving higher, with Brent crude climbing above $66.5 a barrel, though giants BP and Shell were remaining stubbornly in the red.

Neil Wilson, chief market analyst at Markets.com, said: "It looks like OPEC cuts are working, with high compliance with production curbs so far in 2019. Moreover, as previously noted, Saudi Arabia has said it’s prepared to cut harder. Meanwhile the rebound in stocks and improved risk sentiment seems to be helping on the demand side."

Shares in the travel sector were leading the fallers as new broke over the weekend that low-cost airline Flybmi had collapsed. IAG, Easyjet and Wizz Air were all in the red.

Michael Hewson of CMC Markets observed: "The company blamed Brexit uncertainty as well as higher costs, however the reality is if you can’t fill your aircraft then it’s hard to stay in business, and with capacity rates below the average the sector is set to remain under pressure."

Barclays was slightly lower as US hedge fund Tiger Global has sold its entire stake in Barclays, just days before the bank's results.

Pearson shares rose and then fell as the education group sold its US K12 courseware business to Nexus Capital Management for $250m (£193.6m). Total proceeds comprise an initial cash payment of $25m and an unconditional vendor note for $225m expected to be repaid in three to seven years.

BAE Systems was downed by reports that Germany’s ban on exports to Saudi Arabia was preventing it from completing the sale of 48 Typhoon aircraft to Riyadh.

Also lower was Galliford Try despite agreeing a £275m deal to build 470 new homes and a new council headquarters building in Ealing, London as well as finally handing over the Aberdeen Western Peripheral Route project.

Coca‑Cola HBC was flat as it bought Serbian confectionery business Bambi for €260m (£227m). Bambi makes a range of products including biscuits, wafers and savoury snacks. The company's brands include Bambi, Plazma, Wellness, Zlatni Pek, and Josh.

Riding higher was Reckitt Benckiser as the Dettol and Strepsils maker reports a strong finish to 2018 and said it expects that momentum to continue into 2019.

Miners were on the front foot as copper prices were lifted by supply issues in Asia. Top Indian producer Vedanta has hit a legal hurdle over a smelter, while the Indonesian government has not renewed an export permit for PT Freeport.

Engineer Spirax-Sarco said it was in talks to buy France's Thermocoax from its privater equity owners for €158m (£139m) on a cash-free and debt-free basis.

Convatec shares boosted as they received an upgrade at Barclays to 'equal weight' with a price target of 130p after the collapse last week.

Among small caps, Footasylum was sprinting higher as rival sports shop chain JD Sports snapped up a 8.3% stake.

Market Movers

FTSE 100 (UKX) 7,218.44 -0.25%
FTSE 250 (MCX) 19,095.03 0.57%
techMARK (TASX) 3,533.64 0.09%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 6,303.00p 4.75%
Micro Focus International (MCRO) 1,741.50p 3.66%
Associated British Foods (ABF) 2,309.00p 1.90%
SEGRO (SGRO) 652.00p 1.87%
Royal Bank of Scotland Group (RBS) 252.00p 1.82%
Next (NXT) 4,805.00p 1.71%
Marks & Spencer Group (MKS) 290.30p 1.68%
Severn Trent (SVT) 1,974.00p 1.49%
Standard Life Aberdeen (SLA) 236.90p 1.35%
United Utilities Group (UU.) 825.60p 1.05%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,703.50p -3.16%
Smith (DS) (SMDS) 346.11p -2.09%
International Consolidated Airlines Group SA (CDI) (IAG) 652.20p -1.75%
Ashtead Group (AHT) 2,004.00p -1.43%
Compass Group (CPG) 1,719.00p -1.41%
Paddy Power Betfair (PPB) 6,110.00p -1.29%
Relx plc (REL) 1,700.00p -1.16%
BAE Systems (BA.) 521.00p -1.14%
British American Tobacco (BATS) 2,828.50p -1.07%
Standard Chartered (STAN) 631.10p -1.07%

FTSE 250 - Risers

Acacia Mining (ACA) 229.20p 5.96%
Indivior (INDV) 119.70p 5.60%
Dunelm Group (DNLM) 795.25p 3.82%
TI Fluid Systems (TIFS) 190.40p 3.25%
JD Sports Fashion (JD.) 462.80p 2.98%
Convatec Group (CTEC) 121.90p 2.83%
St. Modwen Properties (SMP) 408.00p 2.72%
B&M European Value Retail S.A. (DI) (BME) 334.90p 2.70%
Inmarsat (ISAT) 372.90p 2.64%
Jupiter European Opportunities Trust (JEO) 718.98p 2.56%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 872.74p -5.29%
Petrofac Ltd. (PFC) 391.00p -2.32%
EI Group (EIG) 197.20p -1.65%
Tullow Oil (TLW) 226.40p -1.61%
Computacenter (CCC) 1,102.00p -1.61%
CYBG (CYBG) 186.50p -1.58%
RHI Magnesita N.V. (DI) (RHIM) 4,404.00p -1.52%
FirstGroup (FGP) 94.60p -1.41%
Herald Investment Trust (HRI) 1,205.00p -1.23%
Capita (CPI) 115.70p -1.11%