London open: Stocks edge up, pound slips as May prepares to trigger Brexit

London stocks edged higher in early trade while the pound slipped back as investors braced for Prime Minister Theresa May to officially kick off divorce proceedings with the European Union.

At 0830 BST, the FTSE 100 was up 0.3% to 7,366.73.

Meanwhile, the pound - which is likely to remain volatile throughout Wednesday's session - was under pressure, down 0.4% at $1.2405, having fallen below $1.24 in Asian trading. Sterling was off 0.2% versus the euro at 1.1494.

On Tuesday, May signed a letter formally notifying the European Council of Britain’s intention to leave the bloc. Newly appointed EU ambassador Sir Tim Barrow will at around 1230 BST personally deliver the document that formally kicks off the two-year process to European Council President Donald Tusk, with the Prime Minister around the same time giving a speech to parliament.

Neil Wilson, senior market analyst at ETX Capital, said it was going to be hard to catch a bid on Wednesday unless May strikes an unexpectedly dovish stance.

"Details are everything now. We could be in for a rough ride today as currency traders react to the contents of the letter being delivered to Brussels and the language May uses in parliament," he said.

"And we’re in for a long period of volatility for the pound and UK assets as the government embarks on protracted and hugely challenging Brexit negotiations. Sterling will be incredibly sensitive to negotiations and will offer a clear gauge of how things are panning out."

"Markets are only a gauge though – they’re not always that great at pricing in the kind of political risk associated with Brexit. In the backdrop is Scotland and the threat of a break-up of the UK."

"The big question now is whether Brexit has been fully factored in. A truly hard Brexit has not been priced into sterling. We could see it move lower still if negotiations take a sour turn - $1.10 is feasible."

In corporate news, holiday tour operator TUI slipped back after it said winter 2016/17 and summer 2017 were trading in line with expectations and reiterated its guidance of at least 10% growth in group underlying EBITA in 2016/17.

Passenger transport operator Stagecoach advanced despite reporting a drop in third-quarter revenues.

BHP Billiton was on the front foot after its iron ore chief Edgar Basto warned that the supply of low-cost seaborne iron ore is expected to grow faster than demand, but assured that company is well-positioned to continue to grow value and shareholder returns.

Auto Trader fell as the digital automotive marketplace appointed Nathan Coe as chief operating officer and executive director with effect from 1 April.

Great Portland Estates was little changed after raising £175m by issuing new seven-year US private placement notes and agreeing new lettings for a property in West London.

Workspace Group pushed lower after saying it has bought an office building in Fitzrovia for £98.5m from design and engineering firm Arup Group.

3i was stronger after an upgrade to 'overweight' from 'equalweight' by Morgan Stanley, but Acacia Mining was under the cosh after JP Morgan Cazenove downgraded the stock to 'neutral' from 'overweight', citing Tanzanian obstacles and an ongoing re-rating.

On the data front, consumer credit and mortgage approvals are at 0930 BST.

Market Movers

FTSE 100 (UKX) 7,366.73 0.32%
FTSE 250 (MCX) 18,948.33 -0.03%
techMARK (TASX) 3,473.33 0.08%

FTSE 100 - Risers

3i Group (III) 722.50p 3.14%
BHP Billiton (BLT) 1,252.00p 2.04%
Carnival (CCL) 4,618.00p 1.09%
Rio Tinto (RIO) 3,252.00p 0.99%
Convatec Group (CTEC) 271.30p 0.89%
Royal Bank of Scotland Group (RBS) 244.30p 0.87%
Antofagasta (ANTO) 805.00p 0.81%
Next (NXT) 4,323.00p 0.79%
Smiths Group (SMIN) 1,607.00p 0.75%
Johnson Matthey (JMAT) 3,030.00p 0.73%

FTSE 100 - Fallers

Randgold Resources Ltd. (RRS) 7,070.00p -1.39%
Rolls-Royce Holdings (RR.) 747.00p -0.86%
Experian (EXPN) 1,612.00p -0.74%
Hikma Pharmaceuticals (HIK) 1,988.00p -0.60%
easyJet (EZJ) 993.50p -0.50%
Tesco (TSCO) 190.25p -0.50%
Sage Group (SGE) 632.50p -0.47%
Barratt Developments (BDEV) 544.00p -0.37%
TUI AG Reg Shs (DI) (TUI) 1,131.00p -0.35%
Bunzl (BNZL) 2,323.00p -0.34%

FTSE 250 - Risers

Nostrum Oil & Gas (NOG) 446.60p 3.40%
Synthomer (SYNT) 477.20p 3.16%
Henderson Group (HGG) 230.90p 1.67%
Vedanta Resources (VED) 796.50p 1.66%
British Empire Trust (BTEM) 672.50p 1.43%
Virgin Money Holdings (UK) (VM.) 321.50p 1.39%
CYBG (CYBG) 277.70p 1.39%
Smith (DS) (SMDS) 440.00p 1.38%
Ferrexpo (FXPO) 163.10p 1.30%
JPMorgan American Inv Trust (JAM) 379.20p 1.26%

FTSE 250 - Fallers

JRP Group (JRP) 133.60p -3.82%
Acacia Mining (ACA) 440.10p -3.55%
Hochschild Mining (HOC) 263.60p -2.69%
CLS Holdings (CLI) 1,702.21p -2.45%
Polypipe Group (PLP) 344.00p -2.44%
Card Factory (CARD) 262.10p -2.38%
AO World (AO.) 138.30p -2.19%
Allied Minds (ALM) 302.50p -1.72%
Centamin (DI) (CEY) 172.70p -1.71%
Polymetal International (POLY) 1,023.00p -1.63%