London midday: Stocks gain as pound drops on retail sales; Carpetright burns sector

London stocks were boosted by midday on Friday by a fall in the pound, which slipped following the release of disappointing retail data that added to the sector's woes alongside a profit warning from Carpetright.

The FTSE 100 was up 0.3% to 7,723.66 as the pound fell 0.2% against the dollar to 1.3873 and 0.3% versus the euro to 1.1315. The top-flight index tends to benefit from a weaker sterling as around 70% of its constituents derive most of their earnings from overseas.

Retail shares were under pressure from woeful official data from the Office for National Statistics and after small-cap flooring specialist Carpetright issued its second profit warning in as many months, with trading in its important post-Christmas period reported to be “significantly behind expectations”.

Shares in the company fell more than 40%, while more bad news came out of the sector as budget womenswear retailer Bonmarche posted a drop in sales over the Christmas period amid a “challenging” clothing market.

B&Q owner Kingfisher, Next, Marks & Spencer, Card Factory and Dixons Carphone were therefore already in the red when ONS data showed industry sales sank sharply last month in the worst December performance for seven years as households continued to feel the real income squeeze.

A 1.6% fall in retail sales volumes in December compared to the preceding month was worse than the 1.1% dip the market expected and came after the previous month's Black Friday-boosted growth was revised to 1.1%. It was the biggest monthly drop since June 2016 as well as being the worst festive result since 2010.

Year on year, retail sales were up 1.3%, which was down from the previous month's 1.5% and well short of the 2.6% consensus forecast.

The fall in sales was led by a 1.3% month-to-month decline in non-food sales, a 1.1% drop in food stores sales and a 4.8% decline in quantities not bought in-store.

IG analyst Joshua Mahony said: "Today's figures should be taken with a pinch of salt, with the deterioration coming amid a shift in shopping trends, towards the black Friday/cyber Monday fuelled November rather than last minute pre-Christmas spending in December."

Also on the high street, funeral provider Dignity saw its shares tank as it issued a profit warning and announced a 25% price cut in its simple funerals and a freeze on the cost of traditional ceremonies, blaming stiff competition.

Elsewhere, HSBC was in the red as it agreed a financial settlement with the US Department of Justice to wipe the slate clean after an investigation into the bank's foreign exchange division discovered confidential client information was misused for the bank's own profit in 2010 and 2011.

AstraZeneca was little changed after the drugmaker announced Japanese regulatory approval for Fasenra as an add-on treatment for bronchial asthma in patients, as well as for its Merck partnership's Lynparza tablets as a maintenance therapy for patients with platinum-sensitive relapsed ovarian cancer

Motor and home insurer Esure edged up after it said chief executive Stuart Vann has left the company with immediate effect as it "evolves" its strategy, with founder and chairman Peter Wood taking a more active role. Trading was also reported to be in line with expectations.

British Land slipped as it appointed Simon Carter - currently chief financial officer at Logicor - as its new CFO, succeeding Lucinda Bell.

Fevertree Drinks fizzed higher amid takeover talk and as Jefferies initiated coverage of the stock at ‘buy’.

EasyJet flew higher after an upgrade to ‘overweight’ at Morgan Stanley, while InterContinental Hotels was lifted by an upgrade to ‘buy’ at Goldman Sachs.

Market Movers

FTSE 100 (UKX) 7,723.66 0.29%
FTSE 250 (MCX) 20,641.92 -0.11%
techMARK (TASX) 3,517.62 0.41%

FTSE 100 - Risers

easyJet (EZJ) 1,555.00p 2.78%
NMC Health (NMC) 3,268.00p 2.19%
InterContinental Hotels Group (IHG) 4,902.00p 2.04%
Fresnillo (FRES) 1,403.00p 2.04%
Smurfit Kappa Group (SKG) 2,614.00p 1.87%
Rolls-Royce Holdings (RR.) 899.60p 1.83%
Shire Plc (SHP) 3,509.50p 1.65%
Rentokil Initial (RTO) 313.40p 1.49%
G4S (GFS) 292.20p 1.46%
Intertek Group (ITRK) 5,292.00p 1.30%

FTSE 100 - Fallers

Kingfisher (KGF) 332.00p -3.49%
BT Group (BT.A) 262.65p -1.63%
Next (NXT) 4,920.00p -1.20%
Centrica (CNA) 139.44p -1.10%
Tesco (TSCO) 208.10p -0.76%
Mediclinic International (MDC) 602.00p -0.69%
BP (BP.) 513.30p -0.62%
Marks & Spencer Group (MKS) 304.40p -0.59%
Old Mutual (OML) 235.20p -0.55%
3i Group (III) 936.40p -0.53%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 356.80p 3.21%
Hochschild Mining (HOC) 244.00p 2.43%
Renishaw (RSW) 5,673.80p 2.42%
Ibstock (IBST) 263.20p 2.33%
Vectura Group (VEC) 114.10p 2.06%
Cobham (COB) 134.75p 1.97%
Mitchells & Butlers (MAB) 267.80p 1.83%
Polymetal International (POLY) 882.60p 1.57%
Petrofac Ltd. (PFC) 552.03p 1.55%
Aveva Group (AVV) 2,884.00p 1.55%

FTSE 250 - Fallers

Dignity (DTY) 975.50p -49.09%
Purecircle Limited (DI) (PURE) 419.50p -4.98%
Card Factory (CARD) 203.39p -3.33%
Cineworld Group (CINE) 521.00p -2.98%
Babcock International Group (BAB) 719.80p -2.47%
Dixons Carphone (DC.) 190.25p -2.39%
Capita (CPI) 370.00p -2.37%
Ultra Electronics Holdings (ULE) 1,464.00p -2.14%
Kier Group (KIE) 1,018.79p -2.13%
Howden Joinery Group (HWDN) 447.30p -1.95%