London midday: Stocks off lows as Rolls-Royce rockets, but Cohn resignation weighs

London stocks had pared losses by midday on Wednesday, helped by a stellar performance from Rolls-Royce, although the resignation of US President Trump's chief economic advisor Gary Cohn and the prospect of a trade war kept investors on edge.

The FTSE 100 was off 0.1% to 7,138.86, while the pound was down 0.2% against the dollar at 1.3860 and 0.3% weaker versus the euro at 1.1159.

Cohn, an advocate of free trade, quit over Trump's decision to impose tariffs on steel and aluminium imports. His resignation was announced after the close of US markets on Tuesday.

IG market analyst Joshua Mahony said: "Gary Cohn’s decision to leave the post as the chief economic advisor is certainly bad news for global trade, for his inability to support Trump’s steel and aluminium tariffs means we are likely to see a successor which takes a view which is far less laissez-faire. The chances of a trade war will certainly be heightened with an economic advisor who condones Trump’s tariffs, and with the EU meeting to discuss their potential retaliation today, things could really start to ramp up from here on in."

According to a Bloomberg report, Trump's administration is considering a wide range of import tariffs on Chinese goods from shoes and clothing to consumer electronics, and a clampdown on Chinese investments in the US.

The European Union responded to Trump's plans on Wednesday, with commissioner for trade Cecilia Malmstrom saying that the EU is working hard to ensure any tariffs imposed comply with WTO rules. Malmstrom tweeted: "We have made it clear that a move that hurts the EU and puts thousands of European jobs in jeopardy will be met with a firm and proportionate response."

Investors were also jittery ahead of the impending release of the EU's draft guidelines for the upcoming Brext trade talks.

In economic news, the latest data from lender Halifax showed that house prices in the UK registered their first quarterly fall since May last year in the three months to February, while on a yearly basis, they hit their lowest rate of growth since March 2013.

House prices in the quarter were down 0.7% compared to the previous three months. On the month, prices were up 0.4% following 0.5% and 0.8% declines in January and December, beating expectations for a 0.3% increase. On the year, meanwhile, house prices rose 1.8% to an average price of £224,353 in February, ahead of expectations for a 1.6% gain but below the 2.2% growth seen in January and marking the slowest growth in five ye

On the corporate front, NMC Health lost ground despite reporting a jump in full-year net profit and revenue, while Paddy Power Betfair declined after saying it swung to a net profit in 2017 as operating profit and revenue grew, but warning that sporting results favouring bookies have hit customer activity.

FTSE 250 recruiter PageGroup was weaker as it posted an 18% jump in pre-tax profit in a year that saw record gross profit in 22 countries, but warned of challenging conditions in the UK.

Equiniti slipped as it said profit after tax declined 53% in 2017 to £15.6m, while Rank Group fell after announcing the resignation of its chief executive Henry Birch.

Esure slipped even as it reported a 36% rise in full-year pre-tax profit.

Leading the risers was aerospace and defence giant Rolls-Royce, which rocketed after reporting 25% profits growth thanks to solid revenues and its cost-saving programme. These gains helped to keep overall losses in the equity market to a minimum.

National Grid was higher after relaying its tentatively positive initial thoughts with regard to the latest gas and electricity transmission price control proposal from regulator Ofgem.

Legal & General ticked higher as it said its annual profit rose by almost a third as the insurer sold more pension services and released £332m from its reserves. Operating profit for the year to the end of December increased 32% to £2.1bn as new annuity and pension risk transfer business rose to £4.6bn from £4.1bn.

DS Smith, whose shares rallied on Tuesday after peer Smurfit Kappa said it had rejected a takeover offer from International Paper, was a touch lower after saying its overall trading in the third quarter was in line with expectations.

Hill & Smith surged after saying it delivered its "best ever" trading performance in 2017 and following an upgrade to 'buy' at Investec.

Tritax Big Box gained as the real estate investment trust reported a 10.3% increase in 2017 EPRA net asset value, while CLS Holdings edged up as the property investment company posted a 17% increase in full-year EPRA net asset value.

In broker note action, EasyJet and IAG were both initiated at 'neutral' at Citi, while Informa was lifted to 'add' by Peel Hunt. Superdry and Card Factory were both upgraded to 'buy' at Liberum.

Metro Bank was cut to 'sell' at Investec, Diageo was downgraded to 'neutral' by Natixis and Hunting was cut to 'market perform' at Bernstein.

Market Movers

FTSE 100 (UKX) 7,138.86 -0.11%
FTSE 250 (MCX) 19,647.27 -0.22%
techMARK (TASX) 3,341.08 -0.21%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 935.20p 12.81%
Smurfit Kappa Group (SKG) 3,132.00p 2.96%
National Grid (NG.) 778.10p 2.67%
Centrica (CNA) 144.45p 2.34%
Kingfisher (KGF) 354.70p 1.81%
Mondi (MNDI) 1,982.50p 1.69%
Ferguson (FERG) 5,242.00p 1.59%
International Consolidated Airlines Group SA (CDI) (IAG) 620.60p 1.57%
Pearson (PSON) 752.00p 1.32%
United Utilities Group (UU.) 689.80p 1.14%

FTSE 100 - Fallers

Paddy Power Betfair (PPB) 7,925.00p -3.59%
NMC Health (NMC) 3,240.00p -3.51%
Glencore (GLEN) 356.70p -3.18%
Intertek Group (ITRK) 4,966.00p -2.47%
BHP Billiton (BLT) 1,432.20p -2.44%
Anglo American (AAL) 1,719.20p -2.33%
Antofagasta (ANTO) 864.60p -2.22%
Fresnillo (FRES) 1,203.00p -2.16%
WPP (WPP) 1,235.00p -1.95%
Rio Tinto (RIO) 3,675.45p -1.94%

FTSE 250 - Risers

Hill & Smith Holdings (HILS) 1,324.00p 7.12%
FDM Group (Holdings) (FDM) 947.00p 6.64%
Dignity (DTY) 896.50p 4.00%
Capita (CPI) 156.55p 2.99%
BCA Marketplace (BCA) 156.24p 2.79%
Card Factory (CARD) 205.00p 2.55%
Euromoney Institutional Investor (ERM) 1,228.00p 2.33%
Royal Mail (RMG) 564.00p 2.25%
Domino's Pizza Group (DOM) 311.10p 2.23%
Superdry (SDRY) 1,777.00p 2.19%

FTSE 250 - Fallers

Pagegroup (PAGE) 497.40p -4.99%
Acacia Mining (ACA) 137.15p -4.76%
Hochschild Mining (HOC) 201.20p -4.33%
Bodycote (BOY) 932.50p -3.17%
AA (AA.) 71.70p -3.11%
Inmarsat (ISAT) 467.60p -2.83%
Polymetal International (POLY) 759.20p -2.69%
Melrose Industries (MRO) 211.50p -2.58%
Centamin (DI) (CEY) 148.60p -2.49%
Intermediate Capital Group (ICP) 1,035.00p -2.45%