London open: Stocks drop after Fed minutes; Barclays and Centrica buck trend

London stocks fell in early trade on Thursday, tracking weakness on Wall Street and in Asia after the latest Federal Reserve minutes revealed that the US central bank wants to keep lifting short-term interest rates gradually this year, as investors waded through a deluge of corporate releases.

At 0845 GMT, the FTSE 100 was down 0.9% to 7,217.65, while the pound was flat against the dollar and the euro at 1.3916 and 1.1327, respectively.

Spreadex analyst Connor Campbell said: "A jittery first half of the week got a lot bloodier on Wednesday night, as the latest Federal Reserve meeting minute reignited the market’s fear of rising interest rates."

The FOMC minutes indicated that “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate”.

Jim Reid at Deutsche Bank noted that US yields jumped after the release of the minutes, when they had been flat and the S&P 500 up around 1% but by the close 10-year US Treasury yields had risen 6bps to 2.951% and the S&P 500 closed at its lowest level in a week.

"Notably, the relatively hawkish minutes was before the January wage growth and CPI / PPI prints, so it seems reasonable to assume that if the Fed was getting more confident in their growth and inflation outlook at their meeting, the subsequent data releases would have only added to their views," he said.

On the data front, fourth-quarter UK GDP is due to be released at 0930 GMT, while the CBI distributive trades survey is at 1100 GMT.

In corporate news, British American Tobacco retreated even as it reported on what it claimed was a record year, with its "transformational" acquisition of Reynolds American leading to a 37.6% surge in revenue to £20.29bn.

BAE Systems was weaker after saying it expects profits for 2018 to be flat, while recruiter Hays fell even as it said interim profit rose 18% on the back of strong growth in its international markets and good cost control in the UK.

Moneysupermarket.com tumbled as its full-year earnings and revenue missed expectations and Kaz Minerals was in the red despite reporting a rise in full-year profit as its numbers missed across the board.

Safestore was on the back foot as it reported a 9.8% rise in first-quarter revenues, while gambling software development company Playtech tanked after its full-year results fell short, with growth rates slowing from 2016.

Bucking the trend, Barclays rallied as it declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits last year.

Centrica rose despite reporting a weak second half in its UK business due to falling customer numbers, as a possible government-imposed price cap led to a 17% fall in adjusted operating profits to £1,252m.

RSA Insurance gained as it posted a jump in full-year profit and bumped up its dividend as a strong performance in Scandinavia, Canada, the Middle East and Ireland helped to offset a poor showing the UK.

Serco racked up strong gains as the outsourcer's 2017 results beat analysts' expectations, while transport group Go-Ahead surged as its first-half operating profit beat forecasts.

Rathbone Brothers edged up as the wealth and investment manager said pre-tax profit was up nearly 18% in the year to 31 December 2017.

GlaxoSmithKline, Diageo, Carnival, HSBC and Imperial Brands were among the companies whose stock went ex-dividend.

In broker note action, Rotork and Weir were lifted to 'hold' from 'underperform' at Jefferies, while TalkTalk was cut to 'hold' from 'buy' at HSBC.

Market Movers

FTSE 100 (UKX) 7,217.65 -0.88%
FTSE 250 (MCX) 19,646.32 -0.72%
techMARK (TASX) 3,329.70 -0.51%

FTSE 100 - Risers

Barclays (BARC) 213.35p 5.57%
RSA Insurance Group (RSA) 627.60p 2.38%
Centrica (CNA) 135.25p 2.31%
Shire Plc (SHP) 3,025.50p 1.12%
Royal Bank of Scotland Group (RBS) 279.50p 0.76%
Admiral Group (ADM) 1,910.50p 0.71%
Direct Line Insurance Group (DLG) 392.60p 0.69%
3i Group (III) 934.60p 0.47%
United Utilities Group (UU.) 664.20p 0.30%
Legal & General Group (LGEN) 261.20p 0.23%

FTSE 100 - Fallers

British American Tobacco (BATS) 4,268.00p -4.09%
Anglo American (AAL) 1,736.00p -3.37%
Imperial Brands (IMB) 2,583.50p -3.09%
Barratt Developments (BDEV) 554.40p -2.29%
HSBC Holdings (HSBA) 731.40p -2.13%
Evraz (EVR) 419.40p -1.92%
Intertek Group (ITRK) 4,917.00p -1.90%
Antofagasta (ANTO) 885.20p -1.86%
Mondi (MNDI) 1,891.50p -1.82%
GlaxoSmithKline (GSK) 1,301.52p -1.74%

FTSE 250 - Risers

Go-Ahead Group (GOG) 1,542.90p 15.31%
AA (AA.) 87.12p 4.24%
Serco Group (SRP) 94.75p 4.18%
Coats Group (COA) 75.30p 2.45%
Vectura Group (VEC) 75.50p 1.62%
Jardine Lloyd Thompson Group (JLT) 1,320.00p 1.54%
Mitie Group (MTO) 159.70p 1.20%
Fidessa Group (FDSA) 3,795.00p 1.20%
Weir Group (WEIR) 2,043.00p 1.14%
Ted Baker (TED) 3,040.00p 1.06%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 255.30p -22.35%
Playtech (PTEC) 698.60p -9.79%
Kaz Minerals (KAZ) 780.60p -4.29%
Hays (HAS) 196.60p -3.91%
NewRiver REIT (NRR) 305.00p -3.02%
FirstGroup (FGP) 82.05p -2.78%
CYBG (CYBG) 293.80p -2.72%
Spire Healthcare Group (SPI) 240.00p -2.68%
Hochschild Mining (HOC) 204.30p -2.67%
Inmarsat (ISAT) 447.40p -2.53%