London midday: Stocks extend gains as sterling drops on Brexit woes
London stocks had extended gains by midday on Tuesday as sterling lost ground on Brexit concerns.
The FTSE 100 was up 0.5% at 7,227.13, having risen sharply on Monday on the back of central bank stimulus hopes and renewed optimism over Sino-US trade relations.
Stocks were boosted by weakness in the pound, which fell 0.3% against the dollar to 1.2087 and 0.4% versus the euro to 1.0905 after officials in Ireland and Brussels rejected Prime Minister Boris Johnson's new demand to renegotiate the Brexit deal ahead of his meetings this week with German Chancellor Angela Merkel and French president Emmanuel Macron.
Johnson wrote a letter to European Council President Donald Tusk calling for the backstop to be scrapped but Tusk rejected the plea.
David Cheetham, chief market analyst at XTB, said: "The latest effort from Boris to persuade the EU to move their lines on the Irish border has fallen on deaf ears and given the ardent belief each party has in its respective view it’s becoming increasingly hard to envisage a way out of the current impasse.
"The pound has sunk back below the $1.21 handle and remains not far from its lowest level in more than three decades!"
Investors were also mulling over the latest survey from the Confederation of British Industry, which showed the UK manufacturing sector stabilised in August following a drop the previous month.
The CBI's total orders balance came in at -13 this month from -34 in July, beating expectations for a reading of -23 and in line with the long-run average. Total order books and export order books were reported as below normal, but to a lesser extent than in July.
Looking ahead, manufacturers expect output volumes to remain flat over the next three months, while output prices are seen steady and expectations for inflation are at their lowest since February 2016.
Anna Leach, CBI deputy chief economist, said: "Despite signs of stabilisation in the data this month, UK manufactures remain on the receiving end of a double whammy: the slowdown in the global economy and Brexit uncertainty. Trade tensions between nations such as China and the US only exacerbate the demand uncertainty facing UK manufacturers.
"As we get closer to October, it’s crucial that the new Prime Minister secures a Brexit deal ahead of that deadline and gets on with pressing domestic priorities, from improving our infrastructure to fixing the apprenticeship levy."
In equity markets, supermarket retailers were in focus after the latest data from research firm Kantar showed that sales at the 'big four' fell in the 12 weeks to 11 August. Sainsbury's shares rose, however, as it fared the best of the bunch, with sales there down just 0.6% versus a 2.7% drop at Morrisons, a 1.6% decline at Tesco and a 1.5% fall at Walmart-owned Asda.
AstraZeneca advanced as the pharmaceuticals giant said results from a clinical trial of its Farxiga drug for the treatment of patients with heart failure met its primary objective.
Persimmon was trading up even as it reported a drop in first-half profit and revenues, as it focuses on improving its customer service.
Specialist engineering company IMI gained as it announced the proposed acquisition of US valve and flow control products manufacturer PBM for $85m (£70.3m).
Energy services company Wood Group ticked up after saying it swung to a first-half profit and announcing the sale of its nuclear business for £250m in cash, which it will use to reduce debt. The company also backed its full-year guidance.
On the downside, miner BHP retreated after it posted its best full-year figures for five years and handed out a record dividend as it cashed in on higher commodity prices, but results still fell short of expectations. Underlying profit rose to $9.12bn from $8.93bn year on year, but was still lower than expectations of $9.4bn.The company announced a dividend of 78 cents a share, meaning that it will hand back $3.9bn to investors in addition to $17bn already announced.
FTSE 100 - Risers
Sainsbury (J) (SBRY) 193.30p 2.63%
Antofagasta (ANTO) 834.80p 2.38%
3i Group (III) 1,106.50p 2.26%
Ocado Group (OCDO) 1,229.50p 2.12%
Hargreaves Lansdown (HL.) 1,953.69p 1.99%
Spirax-Sarco Engineering (SPX) 7,970.00p 1.98%
AstraZeneca (AZN) 7,417.00p 1.87%
Compass Group (CPG) 2,093.00p 1.70%
Halma (HLMA) 1,991.26p 1.60%
Diageo (DGE) 3,499.50p 1.55%
FTSE 100 - Fallers
Kingfisher (KGF) 189.90p -2.21%
United Utilities Group (UU.) 786.40p -1.38%
Rentokil Initial (RTO) 452.50p -1.33%
Severn Trent (SVT) 2,022.00p -0.98%
BHP Group (BHP) 1,765.20p -0.91%
Ferguson (FERG) 5,976.00p -0.90%
SSE (SSE) 1,104.00p -0.81%
Tesco (TSCO) 218.00p -0.77%
Centrica (CNA) 65.86p -0.66%
Land Securities Group (LAND) 746.60p -0.64%
FTSE 250 - Risers
Mitchells & Butlers (MAB) 339.50p 4.78%
Man Group (EMG) 168.90p 3.84%
Bakkavor Group (BAKK) 104.00p 3.59%
Charter Court Financial Services Group (CCFS) 286.00p 3.25%
Entertainment One Limited (ETO) 412.00p 2.95%
OneSavings Bank (OSB) 347.80p 2.90%
Riverstone Energy Limited (RSE) 651.00p 2.52%
Polymetal International (POLY) 1,106.00p 2.45%
RHI Magnesita N.V. (DI) (RHIM) 4,354.00p 2.45%
Sirius Minerals (SXX) 9.23p 2.33%
FTSE 250 - Fallers
Royal Mail (RMG) 190.80p -4.50%
Intu Properties (INTU) 35.20p -3.16%
Vivo Energy (VVO) 116.20p -2.84%
CYBG (CYBG) 144.45p -2.60%
Ashmore Group (ASHM) 466.00p -2.47%
Woodford Patient Capital Trust (WPCT) 42.85p -2.29%
IP Group (IPO) 60.20p -2.27%
Games Workshop Group (GAW) 4,234.00p -2.17%
Clarkson (CKN) 2,495.00p -2.16%
Wetherspoon (J.D.) (JDW) 1,552.00p -1.90%