London open: FTSE edges higher as Italy risks seen to recede

London stocks crawled higher in early trade on Thursday as consumer confidence edged higher and Italian political risks were played down.

The FTSE 100 edged up 15 points or 0.19% to 7,704.54, while the pound climbed 0.35% against the dollar to 1.3332 and remained largely flat on the euro at 1.1386.

The euro firmed up against the dollar as concerns around Italy’s political situation eased a touch, or at least are put on hold until Lega and M5S can form a government, said market analyst Neil Wilson at Markets.com.

"European equities are firmer in early trade and yesterday’s rebound for stocks may well hold if we see the two populists form a government, though longer term any such government faces a clash with the EU/ECB. They may also face a considerable backlash from bond markets again – calm for the moment – if they push ahead with plans to increase debt-to-GDP. At around 1.33% the two-year BTP has retreated back to more normal levels but could be susceptible to further whipsaws.

"Reports this morning suggest Paolo Savona could become foreign minister in a Lega-M5S government, a move that could be palatable for all the sides. In the near term the avoidance of snap elections would be positive for risk, but longer-term concerns remain. It does look as though the main risk being priced in earlier this week when bonds and stocks sold off sharply was the threat of another election that could have been framed in a more anit-EU light. Again we must reiterate that stock and bond markets will remain volatile and highly sensitive to the political situation in Rome."

UK consumer confidence edged higher in May, consultancy GfK reported, with an increase of two points to -7 that bested the consensus forecast of -8.

Nevertheless, and as Joe Staton, client strategy director at GfK said: "With UK retail sales falling at their sharpest rate since the mid-90s, tough trading conditions for Britain's hard-pressed retail sector continue to take their toll. Shoppers are still not showing signs of a willingness to splash-the-cash. Will this self-imposed austerity remain the hallmark of pre-Brexit Britain in the run-up to March 2019 and beyond?"

Meanwhile, mortgage lender Nationwide's latest house price data revealed a slowdown in the rate of home price gains from a 2.6% clip for the year to April to 2.4% in May. That was well beneath the 3.0% rise that economists had penciled in.

Bank shares were mostly in the red as the Financial Conduct Authority fired a warning shot over the way overdrafts are charged, announcing measures intended to save consumers up to £140m a year and calling for fundamental reform of the sector. Following an 18-month review of high-cost consumer credit, the FCA is proposing introducing mobile alerts to warn of potential overdraft charges, stopping the inclusion of overdrafts in the term “available funds” and making it clearer that overdrafts are credit, among other measures.

Chemicals producer Johnson Matthey rose after it reported flat underlying profits and raised the dividend 7%.

Building materials group CRH climbed as it began a shake-up of its business, as it looks to merge European and US divisions and boost profits.

FirstGroup was skidding lower after boss Tim O'Toole stepped down with immediate effect after the transport operator swung deep into the red after writing down the value of various assets on its balance sheet, especially its Greyhound unit. The company also booked a £106.3m onerous contract provision for the Trans Pennine Express, as a result of management's excessively optimistic assumptions when it bid for the contract.

Greeting cards, dressings and gifts retailer Card Factory reported quarterly like-for-like sales down 0.4% against strong comparatives and a tough retail environment. The group said it was continuing its store roll out, with 10 net new stores opened, keeping it on track for its target of 50 openings for the full year.

Legal & General was little moved after announcing that Mark Zinkula, chief executive officer of its investment management arm, had advised the board of his intention to retire from the company in August next year.

Market Movers

FTSE 100 (UKX) 7,709.76 0.26%
FTSE 250 (MCX) 20,907.48 0.41%
techMARK (TASX) 3,538.31 0.04%

FTSE 100 - Risers

CRH (CRH) 2,792.00p 4.18%
Mediclinic International (MDC) 641.40p 2.17%
Informa (INF) 782.60p 1.87%
Glencore (GLEN) 378.22p 1.62%
Antofagasta (ANTO) 1,064.50p 1.43%
Evraz (EVR) 489.80p 1.43%
Mondi (MNDI) 2,097.00p 1.30%
Anglo American (AAL) 1,803.20p 1.30%
Johnson Matthey (JMAT) 3,438.00p 1.21%
Fresnillo (FRES) 1,354.50p 1.08%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 191.32p -4.91%
National Grid (NG.) 839.00p -4.06%
Marks & Spencer Group (MKS) 288.10p -3.16%
Severn Trent (SVT) 1,982.00p -0.95%
NMC Health (NMC) 3,630.00p -0.93%
United Utilities Group (UU.) 778.60p -0.69%
Imperial Brands (IMB) 2,678.50p -0.59%
easyJet (EZJ) 1,700.00p -0.58%
Sage Group (SGE) 662.00p -0.39%
Vodafone Group (VOD) 194.22p -0.34%

FTSE 250 - Risers

Hikma Pharmaceuticals (HIK) 1,373.50p 4.29%
B&M European Value Retail S.A. (DI) (BME) 404.00p 3.62%
UBM (UBM) 1,026.00p 2.75%
Euromoney Institutional Investor (ERM) 1,282.00p 2.72%
Contour Global (GLO) 237.60p 2.41%
Clarkson (CKN) 2,565.00p 2.40%
Ashmore Group (ASHM) 373.00p 2.02%
Go-Ahead Group (GOG) 1,775.00p 1.95%
Herald Investment Trust (HRI) 1,294.25p 1.91%
Centamin (DI) (CEY) 129.06p 1.82%

FTSE 250 - Fallers

FirstGroup (FGP) 100.00p -9.75%
Indivior (INDV) 468.10p -2.19%
Computacenter (CCC) 1,312.00p -2.09%
Virgin Money Holdings (UK) (VM.) 344.50p -1.57%
Renishaw (RSW) 5,240.00p -1.41%
Thomas Cook Group (TCG) 114.50p -1.29%
Spectris (SXS) 2,801.00p -1.27%
CYBG (CYBG) 290.60p -1.09%
Provident Financial (PFG) 630.20p -0.97%
Great Portland Estates (GPOR) 691.50p -0.89%