London close: Stocks end flat in thin volumes ahead of Christmas; Barclays drops
London stocks ended a half-day session with a whimper rather than a bang on Friday amid holiday-thinned volumes, as investors digested an upward revision to third-quarter UK economic growth figures and some key news for the banking sector.
Meanwhile, oil prices retreated as investors booked some profits ahead of the holidays, with West Texas Intermediate down 1% at $52.42 a barrel and Brent crude 1% lower at $54.51.
Data from the Office for National Statistics showed the UK economy grew more than initially estimated in the third quarter.
Growth for the three months following the Brexit vote was revised up to 0.6% from a previous estimate of 0.5%. The pound briefly popped higher on the news, but stock markets showed no reaction.
Darren Morgan, ONS head of GDP, said: “Robust consumer demand continued to help the UK economy grow steadily in the third quarter of 2016. Growth was slightly stronger than first thought, though, due to greater output in the financial sector.”
However, year-on-year growth was revised down a touch to 2.2% from a previous estimate of 2.3%, as second-quarter growth was revised down to 0.6% on the quarter from 0.7%, while first quarter growth was revised to 0.3% from 0.4%.
Meanwhile, figures from the ONS showed the current account deficit widened in the third quarter to £25.5bn from £22.1bn in the second. The deficit in goods trade widened to a record £38.7bn, but trade in services hit a record surplus of £25.1bn.
Richard de Meo, managing director of Foenix Partners, said that “at a glance, everything seems in order with today’s data”.
“However, a closer inspection reveals very mixed messaging as Q1 and Q2 GDP data suffered downward revisions - leaving the annualised rate at 2.2% - and further contradictions are evident in the data breakdown. Very strong performance in the services sector, the sharpest rise in employee compensation in three years and outperformance in construction and industrial production are then firmly offset by very weak figures in household disposable income, continuing declines in business investment and a widening of the current account deficit.”
Banks were in focus as the Italian cabinet gave the green light to rescue Banca Monte dei Paschi di Siena after it failed to raise €5bn from private investors, and as Deutsche Bank and Credit Suisse agreed muti-billion dollar fines with the US Department of Justice.
In London, Barclays was under the cosh after the US Department of Justice filed a lawsuit against the bank and two of its former executives on civil charges of fraud in the sale of mortgage-backed securities in the run-up to the financial crisis.
Barclays said on Friday that it rejects the claims made in the complaint and considers that they are “are disconnected from the facts”, adding that it will “vigorously defend the complaint”.
CMC Markets’ Jasper Lawler said: “The lawsuit is a surprise because it was assumed a reasonable compromise could be reached between the DOJ and the banks. Barclays appears to be playing the long game, hoping it can get a better result in the courts.”
News about Barclays came as peers Deutsche Bank and Credit Suisse agreed to pay $7.2bn and $5.3bn in fines, respectively. Deutsche rallied as the fine was much smaller than the $14bn that had been expected, while CS fell as analysts had pencilled in a lower fine of around $2bn.
Royal Bank of Scotland – which has yet to settle with US authorities over its alleged mis-selling of mortgage-backed securities – was in the black.
Elsewhere, AstraZeneca nudged up after completing an agreement with Pfizer for the sale of the commercialisation and development rights to its late-stage small molecule antibiotics business, comprising the approved antibiotics Merrem, Zinforo and Zavicefta, and ATM-AVI and CXL, which are in clinical development.
Paypoint advanced after it said it will pay a special dividend as it announced the sale of its mobile payments business to Volkswagen Financial Services AG for £26.5m in cash.
Market Movers
FTSE 100 (UKX) 7,066.69 0.04%
FTSE 250 (MCX) 17,936.54 0.25%
techMARK (TASX) 3,354.90 0.33%
FTSE 100 - Risers
Capita (CPI) 521.00p 3.78%
Land Securities Group (LAND) 1,072.00p 2.19%
National Grid (NG.) 949.10p 1.67%
Hammerson (HMSO) 568.50p 1.52%
AstraZeneca (AZN) 4,407.50p 1.50%
Imperial Brands (IMB) 3,547.00p 1.31%
Whitbread (WTB) 3,750.00p 1.24%
Intu Properties (INTU) 277.60p 1.20%
International Consolidated Airlines Group SA (CDI) (IAG) 456.20p 1.18%
Royal Bank of Scotland Group (RBS) 230.60p 1.14%
FTSE 100 - Fallers
HSBC Holdings (HSBA) 645.80p -1.43%
Barratt Developments (BDEV) 470.60p -1.13%
BHP Billiton (BLT) 1,257.50p -1.02%
Burberry Group (BRBY) 1,458.00p -0.95%
Barclays (BARC) 225.00p -0.88%
Intertek Group (ITRK) 3,386.00p -0.82%
Marks & Spencer Group (MKS) 352.20p -0.79%
Kingfisher (KGF) 347.50p -0.69%
Rio Tinto (RIO) 3,061.50p -0.63%
Shire Plc (SHP) 4,536.50p -0.57%
FTSE 250 - Risers
SEGRO (SGRO) 456.50p 2.79%
Mitie Group (MTO) 225.40p 2.69%
Auto Trader Group (AUTO) 404.50p 2.41%
Beazley (BEZ) 389.60p 2.04%
Workspace Group (WKP) 761.00p 1.87%
Rightmove (RMV) 3,929.00p 1.84%
Derwent London (DLN) 2,783.00p 1.83%
Thomas Cook Group (TCG) 86.00p 1.78%
PayPoint (PAY) 962.50p 1.74%
Evraz (EVR) 227.80p 1.74%
FTSE 250 - Fallers
Nostrum Oil & Gas (NOG) 381.80p -4.31%
Ferrexpo (FXPO) 134.70p -2.67%
Supergroup (SGP) 1,581.00p -2.47%
CLS Holdings (CLI) 1,538.00p -2.29%
JD Sports Fashion (JD.) 315.80p -2.20%
Ocado Group (OCDO) 252.30p -2.17%
Hochschild Mining (HOC) 188.30p -2.13%
Fidessa Group (FDSA) 2,271.00p -1.77%
Restaurant Group (RTN) 326.80p -1.57%
Entertainment One Limited (ETO) 227.40p -1.43%