London open: Stocks and sterling rise ahead of vote on Brexit delay bill

London stocks rose in early trade as investors eyed the latest reading on the UK services sector, while sterling regained some ground as MPs were set to vote on the Brexit delay bill.

At 0840 BST, the FTSE 100 was 0.7% higher at 7,315.30, while sterling was up 0.5% against the dollar at 1.2139, having fallen below $1.20 on Tuesday, and 0.4% firmer versus the euro at 1.1050.

Neil Wilson, chief market analyst at Markets.com, said: "The pound edged higher as Boris Johnson's Brexit strategy appeared in disarray."

Johnson lost 328-301 in a key vote that handed control of the parliamentary timetable to MPs, paving the way for a crossbench Bill that could prevent a no-deal Brexit and delay the departure date until January 31.

"He will now table a motion to call an election, however it is unclear whether Labour will play along. Do they fall into the 'elephant trap', or do they prefer to watch the new Tory regime implode? With rebels having the whip withdrawn the government benches are now very much in the minority," Wilson said.

Wilson said the threat of no-deal remains high. "An election has to happen sooner or later - surely it is better to happen now? Even if Parliament gets its anti-no-deal legislation on the statute book before an election, a new parliament would be free to revoke."

The pound appeared to have found "something of a floor for now" at $1.20, said Wilson, adding that the move higher only serves to underscore the kind of headline risk and volatility that can be expected over the coming weeks. He also pointed out that at least some of the rally in the pound is down to the drop in the US dollar following the weak ISM manufacturing print on Tuesday.

Away from Brexit, market participants were mulling the latest data out of China. The Caixin services survey was released overnight, showing a reading of 52.1 for August versus 51.6 in July and expectations of 51.7.

On home shores, the focus will be on the services PMI due for release at 0930 BST. It is expected to show a drop to 51.0 in August from 51.4 in July.

In equity markets, Asia-focused Prudential was the standout gainer as worries about Hong Kong receded on reports that it will withdraw the controversial extradition bill that has sparked weeks of unrest. Luxury brand Burberry also rose.

Royal Bank of Scotland was in the green as it said a last minute higher-than-expected spike in claims for payment protection insurance claims would result in an extra charge of £600m to £900m in the third quarter. The deadline for claims expired on August 29 and RBS said it had so far made provisions of £5.3bn, of which £4.9bn had been utilised.

Homeware retailer Dunelm was trading up as it defied the high street gloom and posted a 23.5% jump in full-year pre-tax profit but struck a cautious note on the outlook amid Brexit-related uncertainty.

On the downside, Barratt Developments was the worst performer on the FTSE 100. It posted an 8.9% increase in full-year pre-tax profit but revenue came in slightly lower than expected at £4.8bn and the company said it expects to grow volumes towards the lower end of its medium-term target range in FY20.

Avast was under pressure after Sybil Holdings sold off its entire 12.4% stake in the cybersecurity company.

In broker note action, Deutsche Bank downgraded Antofagasta to 'sell' but lifted BHP Group to 'hold'. Societe Generale upgraded GlaxoSmithKline to 'buy'.

Market Movers

FTSE 100 (UKX) 7,315.30 0.65%
FTSE 250 (MCX) 19,569.46 0.54%
techMARK (TASX) 3,859.64 0.18%

FTSE 100 - Risers

Prudential (PRU) 1,409.00p 4.45%
Marks & Spencer Group (MKS) 192.60p 3.13%
Burberry Group (BRBY) 2,248.00p 2.84%
Standard Chartered (STAN) 641.40p 2.66%
Smith (DS) (SMDS) 337.70p 2.43%
HSBC Holdings (HSBA) 605.80p 2.04%
Evraz (EVR) 496.00p 1.99%
International Consolidated Airlines Group SA (CDI) (IAG) 424.80p 1.70%
Legal & General Group (LGEN) 223.90p 1.68%
St James's Place (STJ) 936.60p 1.63%

FTSE 100 - Fallers

Barratt Developments (BDEV) 598.20p -3.83%
Vodafone Group (VOD) 156.26p -1.04%
Micro Focus International (MCRO) 1,103.80p -0.90%
NMC Health (NMC) 2,576.00p -0.66%
Sage Group (SGE) 708.40p -0.39%
Aveva Group (AVV) 3,750.90p -0.30%
Compass Group (CPG) 2,133.00p -0.23%
BT Group (BT.A) 165.80p -0.17%
BP (BP.) 502.40p -0.10%
Unilever (ULVR) 5,323.00p -0.02%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 518.20p 4.06%
Hammerson (HMSO) 236.70p 3.36%
Kaz Minerals (KAZ) 391.60p 2.97%
St. Modwen Properties (SMP) 420.63p 2.59%
FDM Group (Holdings) (FDM) 780.00p 2.36%
Tullow Oil (TLW) 206.38p 2.32%
Savills (SVS) 845.00p 2.30%
Wood Group (John) (WG.) 367.40p 2.20%
B&M European Value Retail S.A. (DI) (BME) 354.20p 2.10%
Funding Circle Holdings (FCH) 112.40p 2.00%

FTSE 250 - Fallers

Contour Global (GLO) 175.20p -4.26%
Avast (AVST) 373.80p -3.11%
Ted Baker (TED) 944.50p -1.72%
Restaurant Group (RTN) 133.40p -1.48%
Sirius Minerals (SXX) 10.28p -1.19%
Barr (A.G.) (BAG) 637.78p -1.12%
Centamin (DI) (CEY) 150.29p -0.83%
Computacenter (CCC) 1,358.00p -0.80%
Pets at Home Group (PETS) 232.60p -0.77%
Hastings Group Holdings (HSTG) 184.50p -0.75%