London midday: Stocks fall further as pound rallies, German data weighs
London stocks extended losses by midday on Friday as the pound regained some composure after European leaders gave the UK a few more weeks to leave the bloc, while weak German manufacturing data sparked global growth concerns.
The FTSE 100 was down 1.1% at 7,274.50, with sterling up 0.3% against the dollar at 1.3143 after the UK narrowly avoided an imminent no deal Brexit, having slumped the day before as it looked like that outcome was likely. Against the euro, meanwhile, it surged 1% to 1.1633 as the single currency was knocked lower by the German data.
IHS Markit's manufacturing purchasing managers' index for Germany fell to 44.7 in March from 47.6 in February, missing expectations for a reading of 48.0.
David Cheetham, chief market analyst at XTB, said: "Due to the country's large level of exports, German manufacturing is often seen as a bellwether of global economic activity and with this metric falling to its lowest level since August 2012 - and in doing so chalking up a third consecutive month in contraction territory with another PMI reading below 50 - it’s sending a clear and obvious warning sign on the health of the global economy."
Overnight, EU leaders agreed to grant Britain an extension to the Brexit deadline to 22 May if Theresa May is able to get her deal through the House of Commons on a third attempt next week. However, if the deal is rejected again, a shorter extension to 12 April will apply, which would in theory allow Parliament to explore alternative options.
Council President Donald Tusk said "all options remain on the table…the UK government will still have a chance of a deal, no deal, a long extension or revoking Article 50" until 12 April.
"The 12th of April is a key date in terms of the UK deciding whether to hold European Parliament elections. If it has not decided to do so by then, the option of a long extension will automatically become impossible," he told a news conference.
Despite sterling's recovery, Neil Wilson, chief market analyst at Markets.com, pointed out that there is a "very real risk" that the Council's decision simply kicks the no-deal can down the road.
"Minds are being focused and the deadlines cannot be extended forever. On the other hand, this could presage an abrupt change in course for the UK’s approach to Brexit," he said. "A lot depends on whether (assuming May fails to get her deal through on the third attempt), would she take Britain out without a deal, and/or would Parliament step in to prevent this.
"Of course, will the Speaker even allow a third vote? Assuming he does there is very little sense that Theresa May will get her deal through at the third attempt."
In equity markets, Unilever and Reckitt Benckiser, which have a strong international presence, lost ground as the pound popped higher.
Plastic packaging supplier RPC Group was in the red as Berry Global said it was not going to lift its £3.3bn bid for the company, while Thomas Cook lurched lower as the tour operator announced the closure of 21 travel agent outlets as part of an increased focus online.
Royal Mail retreated as it announced the appointment of current deputy chairman and British Airways veteran Keith Williams as its new chairman.
B&Q and Screwfix owner Kingfisher was weaker after a downgrade to 'neutral' from 'outperform' at Credit Suisse.
On the upside, clothing retailer Next continued to bounce back after its full-year results on Thursday, while Ted Baker was up after its full-year numbers sparked losses a day earlier.
Smiths Group advanced as it reported a decline in first-half profits that was still 2% ahead of consensus, and said it aims to demerge its medical devices arm by the middle of next year.
Education publisher Pearson was boosted by an upgrade to 'overweight' at JPMorgan and shares in temporary power supplier Aggreko racked up strong gains on the back of an upgrade to 'buy' at Stifel.
Sanne, a provider of alternative asset and corporate services, saw its shares rise as it posted an 11.8% jump in full-year underlying pre-tax profit thanks to strong performances from its core businesses, particularly in EMEA and the US.
Outside the FTSE 350, Debenhams shares were down but off lows, having collapsed earlier after announcing a plan to restructure its debt that could pretty much wipe out shareholders. The announcement was met with an offer from Sports Direct to buy Debenhams' Danish business, Magasin du Nord, for £100m in cash in return for installing Mike Ashley as chief executive of the department store group.
Market Movers
FTSE 100 (UKX) 7,274.50 -1.10%
FTSE 250 (MCX) 19,199.15 -0.77%
techMARK (TASX) 3,549.14 -0.69%
FTSE 100 - Risers
Halma (HLMA) 1,699.00p 1.74%
Next (NXT) 5,402.00p 1.62%
Micro Focus International (MCRO) 1,968.00p 0.90%
3i Group (III) 975.00p 0.60%
Tesco (TSCO) 234.40p 0.51%
Morrison (Wm) Supermarkets (MRW) 225.80p 0.49%
Barratt Developments (BDEV) 586.20p 0.24%
Marks & Spencer Group (MKS) 270.11p 0.19%
SSE (SSE) 1,234.00p 0.12%
GlaxoSmithKline (GSK) 1,567.60p 0.10%
FTSE 100 - Fallers
Smurfit Kappa Group (SKG) 2,184.00p -4.46%
NMC Health (NMC) 2,504.00p -2.95%
Smith (DS) (SMDS) 348.40p -2.46%
Standard Chartered (STAN) 592.10p -2.36%
Just Eat (JE.) 740.60p -2.30%
Mondi (MNDI) 1,735.00p -2.28%
TUI AG Reg Shs (DI) (TUI) 790.00p -2.16%
British American Tobacco (BATS) 3,113.00p -2.11%
Aviva (AV.) 415.60p -2.10%
BAE Systems (BA.) 476.60p -2.06%
FTSE 250 - Risers
Ted Baker (TED) 1,684.00p 5.18%
Just Group (JUST) 71.00p 3.35%
Telecom Plus (TEP) 1,508.00p 2.72%
Aggreko (AGK) 794.47p 2.49%
Lancashire Holdings Limited (LRE) 655.00p 1.55%
Sanne Group (SNN) 511.00p 1.39%
Intu Properties (INTU) 105.95p 1.34%
Dunelm Group (DNLM) 881.00p 1.15%
Renishaw (RSW) 3,772.00p 1.13%
Rank Group (RNK) 163.40p 1.11%
FTSE 250 - Fallers
Hunting (HTG) 598.50p -4.09%
Contour Global (GLO) 174.00p -3.49%
Restaurant Group (RTN) 119.10p -3.48%
Amigo Holdings (AMGO) 173.24p -3.04%
Hays (HAS) 149.50p -2.92%
Pagegroup (PAGE) 479.00p -2.92%
Premier Oil (PMO) 91.66p -2.90%
Kier Group (KIE) 388.40p -2.71%
Morgan Advanced Materials (MGAM) 263.60p -2.59%
CYBG (CYBG) 189.30p -2.42%