London midday: Stocks hold on to gains as M&A provides some cheer

London stocks were holding on to slight gains by midday on Thursday as deal news provided some cheer, but markets were held back by worries about Brexit talks.

The FTSE 100 was up 0.2% to 7,365.96, helped by the pound sagging 0.3% against the euro at 1.1316 and 0.4% lower versus the dollar at 1.3338.

Brexit was at the forefront of investors’ minds as the European Commission said the UK had a deadline of Sunday to agree a text on a potential deal or it will be told that negotiations cannot proceed to the next stage.

Chief Brexit negotiator Michel Barnier had a day earlier told EU ambassadors that Downing Street had told him a potential solution was being worked out that could satisfy Northern Ireland’s Democratic Unionist party and the Republic of Ireland. However, that has yet to be signed off and Ireland's premier Leo Varadkar offered concessions but was not sure the Irish border issue would be solved in time for next week’s crucial summit.

"Implied volatility in the pound against the euro has been rising fairly strongly this week and currently sit at levels not seen since June as the will-they-won’t-they saga relating to Brexit talks progressing to the next stage rumbles on leaving traders on tenterhooks," said analyst David Cheetham at broker XTB.

"Reports this morning that UK PM Theresa May has prepared another Brexit proposal to submit to Ireland in a bid to settle the border dispute have boosted sterling, but until there is official confirmation of a deal the pound’s gains will be capped. An EU summit that kicks off this time next week has been earmarked as an event where the Brexit talks can progress to trade negotiations, but this would likely require a resolution on the Irish border by tomorrow at the latest."

Property investors were also digesting the latest research from Halifax, which showed house prices are continuing to surge higher, running contrary to most other surveys of the housing market.

The Halifax house price index increased by 0.5% month-to-month in November, slightly above the consensus forecast of 0.2% and following a 0.3% increase in October to mark the fifth rise in a row.

House prices in the three months to November rose 2.4% compared to the preceding three month period, which is the This is the fastest price growth on this measure since January.

Growth in the past three months compared to the same period last year slowed to 3.9%, from the 4.5% announced a month ago, which was expected by the market.

Pantheon Macroeconomics said it remains inclined to place much more weight on the Nationwide and Rightmove measures.

“Looking ahead, we remain concerned that even relatively small increases in mortgage rates - in response to last month’s Bank Rate hike and the impending closure of the Term Funding Scheme - will reduce the size of mortgages that households take out, while falling consumer confidence will additionally subdue demand. As such, we still expect house prices merely to flatline over the next 12 months.”

In corporate news, Sky gained following reports that Comcast Corp interested in taking full control of the broadcaster, while building materials group CRH was on the front foot after deciding not to bid for South African rival PPC.

Ladbrokes Coral surged on news is it in advanced talks with GVC Holdings about a possible £3.9bn takeover of the bookmaker. GVC was also sharply higher.

Legal & General ticked up after saying it expected a record year for profits and earnings with growth accelerating across its businesses.

Coca-Cola HBC edged up after it appointed Zoran Bogdanovic as its new chief executive officer with immediate effect, succeeding Dimitris Lois who passed away in October.

William Hill rallied after it settled a dispute with NYX, a Toronto-listed gaming software company in which the bookmaker owns a stake.

On the downside, packaging and paper group DS Smith reversed earlier gains to trade a touch lower after saying sales increased strongly in the first half of the year but profits grew more slowly due to higher paper prices.

Heavily-weighted miners lost ground as copper and iron prices declined, with Rio, Anglo and Glencore all weaker.

Cobham was on the back foot after a downgrade to ‘reduce’ at Kepler Cheuvreux, while Babcock was down as its stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,365.96 0.24%
FTSE 250 (MCX) 19,796.51 -0.16%
techMARK (TASX) 3,416.51 0.17%

FTSE 100 - Risers

BT Group (BT.A) 263.35p 2.39%
Pearson (PSON) 737.00p 2.22%
Reckitt Benckiser Group (RB.) 6,669.00p 1.80%
Hammerson (HMSO) 510.00p 1.69%
Mediclinic International (MDC) 591.50p 1.63%
Sky (SKY) 1,002.00p 1.42%
Vodafone Group (VOD) 227.70p 1.29%
CRH (CRH) 2,612.00p 1.28%
British Land Company (BLND) 644.25p 1.14%
Worldpay Group (WPG) 418.00p 1.06%

FTSE 100 - Fallers

Babcock International Group (BAB) 662.35p -2.31%
Rio Tinto (RIO) 3,432.50p -1.89%
Whitbread (WTB) 3,926.00p -1.60%
Anglo American (AAL) 1,334.00p -1.37%
3i Group (III) 865.30p -1.11%
BAE Systems (BA.) 555.00p -1.07%
Associated British Foods (ABF) 2,894.00p -0.89%
InterContinental Hotels Group (IHG) 4,390.00p -0.88%
Burberry Group (BRBY) 1,724.00p -0.86%
Glencore (GLEN) 334.25p -0.82%

FTSE 250 - Risers

Ladbrokes Coral Group (LCL) 171.20p 26.16%
GVC Holdings (GVC) 965.00p 6.16%
Sophos Group (SOPH) 550.00p 4.66%
Spire Healthcare Group (SPI) 247.90p 4.60%
Aveva Group (AVV) 2,682.00p 3.43%
Alfa Financial Software Holdings (ALFA) 495.00p 3.12%
William Hill (WMH) 299.20p 2.68%
Stagecoach Group (SGC) 182.44p 2.49%
Just Group (JUST) 161.50p 2.34%
Inmarsat (ISAT) 486.70p 2.23%

FTSE 250 - Fallers

Playtech (PTEC) 806.50p -4.67%
Evraz (EVR) 287.20p -3.14%
PayPoint (PAY) 887.50p -3.06%
IP Group (IPO) 139.70p -2.72%
Britvic (BVIC) 798.50p -2.62%
Investec (INVP) 485.20p -2.49%
Vedanta Resources (VED) 640.50p -2.14%
Cobham (COB) 124.00p -2.05%
Electra Private Equity (ELTA) 941.75p -2.00%
Saga (SAGA) 139.80p -1.89%