London midday: Stocks turn higher as pound tumbles on Cox's backstop opinion
London's financial markets were all caught up in the latest twists and turns of the Brexit saga on Tuesday, with stocks reversing earlier losses as sterling tumbled after attorney general Geoffrey Cox gave his legal opinion the Irish backstop.
By midday, the FTSE 100 was up 0.4% at 7,158.17 as the pound slumped almost 1% against the dollar and the euro to 1.3047 and 1.1596, respectively, having surged overnight as May said she had secured changes to the Brexit deal which meant the Irish backstop could not become permanent.
Following last-minute talks with European Commission president Jean-Claude Juncker in Strasbourg on Monday night, May agreed a "joint legally binding instrument" on the withdrawal agreement which could be used by the UK if the EU tried to keep the country tied to the backstop indefinitely.
There was also a joint statement about the future relationship between the UK and the EU, which commits to replacing the backstop by December 2020.
Sterling rose to within a breath of $1.33 and peaked at €1.18 overnight on the news, but gains had evaporated by midday as Cox concluded that the new assurances obtained by May reduce but do not remove the risk of the UK being stuck in the backstop.
"I now consider that the legally binding provisions of the joint instrument and the content of the unilateral declaration reduce the risk that the United Kingdom could be indefinitely and involuntarily detained within the protocol’s provisions at least in so far as that situation had been brought about by the bad faith or want of best endeavours of the EU," he said.
However, he said the legal risk remains unchanged that if "intractable differences" arise, the UK would have "no internationally lawful means of exiting the protocol’s arrangements".
May's deal will be put to the test on Tuesday evening when MPs take part in the second 'meaningful' vote.
David Cheetham, chief market analyst at XTB, said: "The bulk of Monday’s gains have now been handed back and it looks like any hopes of an unlikely victory for the PM's deal later have just been extinguished."
With the focus firmly on Brexit, the latest reading on UK economic growth from the ONS came and went pretty much unnoticed.
Gross domestic product rose 0.5% month-on-month in January, beating forecasts and marking a return to positive territory following December’s 0.4% decline as the underlying strength of the services sector helped offset weakness in construction and production.
In equity markets, housebuilders and banks continued to make gains even as Brexit optimism faded, with Persimmon, RBS, Lloyds, Barratt Developments and Berkeley all higher. Lloyds was also boosted by an upgrade to 'neutral' at Goldman Sachs.
Sirius Minerals racked up strong gains after saying it has received a conditional proposal from a major global financial institution in respect of the "stage 2" financing that would fund its Yorkshire polyhalite mine through to production.
Domino's Pizza advanced as it reported a drop in annual profit following a mixed year but said it expects a better performance in 2019.
Computacenter rose after it posted a jump in full-year profit as revenue exceeded £4bn for the first time, with strong growth in the UK and Germany.
Shipping services group Clarkson was a high riser after JPMorgan upped its recommendation on the stock following full-year results a day earlier.
On the downside, Equiniti slid despite a set of in line final results, with Liberum noting disappointment over the three-month delay to the operational separation of EQ US from Wells Fargo.
Security services firm G4S was under the cosh as it reported flat underlying profits for 2018 but a positive outlook for 2019.
Cairn Energy was weaker as the oil and gas exploration and development company said it swung to a net loss in 2018.
Market Movers
FTSE 100 (UKX) 7,158.17 0.39%
FTSE 250 (MCX) 19,202.27 0.57%
techMARK (TASX) 3,495.95 0.42%
FTSE 100 - Risers
Evraz (EVR) 609.40p 2.39%
St James's Place (STJ) 1,022.50p 2.31%
TUI AG Reg Shs (DI) (TUI) 779.20p 1.96%
Smurfit Kappa Group (SKG) 2,212.00p 1.84%
ITV (ITV) 132.60p 1.80%
Schroders (SDR) 2,656.00p 1.80%
Marks & Spencer Group (MKS) 270.80p 1.73%
Lloyds Banking Group (LLOY) 62.84p 1.70%
Persimmon (PSN) 2,223.31p 1.66%
easyJet (EZJ) 1,180.55p 1.64%
FTSE 100 - Fallers
GVC Holdings (GVC) 574.25p -2.34%
Intertek Group (ITRK) 4,697.00p -1.43%
Rentokil Initial (RTO) 349.30p -1.19%
Antofagasta (ANTO) 930.80p -0.98%
NMC Health (NMC) 2,670.00p -0.52%
Hikma Pharmaceuticals (HIK) 1,669.00p -0.51%
Informa (INF) 708.20p -0.51%
BP (BP.) 533.50p -0.39%
Anglo American (AAL) 1,996.20p -0.36%
Ashtead Group (AHT) 1,915.00p -0.34%
FTSE 250 - Risers
Sirius Minerals (SXX) 19.44p 8.30%
Domino's Pizza Group (DOM) 247.30p 6.09%
Quilter (QLT) 139.84p 5.89%
Clarkson (CKN) 2,390.00p 5.52%
Computacenter (CCC) 1,172.00p 5.21%
TP ICAP (TCAP) 299.00p 3.53%
CYBG (CYBG) 203.00p 2.99%
888 Holdings (888) 167.30p 2.89%
Brewin Dolphin Holdings (BRW) 318.00p 2.78%
FDM Group (Holdings) (FDM) 936.00p 2.74%
FTSE 250 - Fallers
Equiniti Group (EQN) 189.60p -6.60%
G4S (GFS) 199.80p -4.08%
Amigo Holdings (AMGO) 202.45p -2.86%
Cairn Energy (CNE) 170.10p -2.63%
Woodford Patient Capital Trust (WPCT) 79.97p -2.36%
Syncona Limited NPV (SYNC) 256.73p -2.20%
Bodycote (BOY) 811.00p -1.82%
William Hill (WMH) 153.65p -1.73%
Inmarsat (ISAT) 445.70p -1.70%
Intu Properties (INTU) 109.25p -1.58%