London midday: Stocks off lows as sterling slips versus dollar
London stocks were down but off earlier lows by midday, helped along by a weakening of the pound versus the dollar, although the currency remained firmer against the euro after Angela Merkel secured a fourth term as German chancellor but with the tricky task of setting up a coalition.
The FTSE 100 was off 0.2% to 7,296.05, with the pound 0.5% higher versus the euro at 1.1353 after Merkel's conservative bloc saw its worst result in nearly 70 years, taking 33% of the vote as anti-immigration Alternative for Germany (AfD) took 12.6% of the vote.
However, sterling's earlier gains against the dollar had evaporated by midday, with the currency down 0.1% at $1.3493.
A firmer pound tends to weigh on the main index as around 70% of its constituents derive their earnings from overseas.
Oanda analyst Craig Erlam said that as it stands, Angela Merkel’s CDU party will likely go into coalition with the FDP and Green parties, forming what has become known as the Jamaica coalition due to the respective party colours, with another grand coalition with the SPD apparently off the cards.
"The SPD performed even worse than expected and appeared to suffer as a result of the party’s last partnership with its rival. Still, investors appear confident that coalition talks will go smoothly, although they could take anything from a few weeks to a few months to complete, leaving a small element of uncertainty in the meantime."
Investors were also digesting Moody's downgrade of the UK's credit rating late on Friday to an Aa2 from Aa1 as the ratings agency said leaving the European Union could dent the country's economic growth.
On the corporate front, shares in Imagination Technologies bucked the trend, surging 33% after the company agreed late on Friday to be taken over by US-based, Chinese-backed private equity firm Canyon Bridge Partners for £550m.
Tullow Oil was also on the front foot after it said that its TEN fields offshore Ghana will not be affected by the maritime boundary dispute between Ghana and Cote d'Ivoire
Unilever nudged up after it agreed to buy skincare business, Carver Korea, from Bain Capital and Goldman Sachs for €2.27bn, while Pennon gained after the water and waste company said its half-year results remained "on track to deliver in line" for both businesses and it felt well placed for the rest of the year.
On the downside, Essentra was in the red after confirming that its health and personal care packaging sites at Manati and Guaynabo in Puerto Rico have been disrupted as a result of Hurricane Maria, although both sites remained “fundamentally intact”.
UAE-based healthcare provider NMC Health reversed earlier gains to trade slightly lower despite announced a significant expansion into the Kingdom of Saudi Arabia, as it received all the necessary regulatory approvals for a long-term care facility in Jeddah.
Shaftesbury was a little weaker as it said demand for West End properties has help up but leasing transactions at larger sites have slowed down due to current political and macroeconomic uncertainties.
Market Movers
FTSE 100 (UKX) 7,296.05 -0.20%
FTSE 250 (MCX) 19,552.43 0.18%
techMARK (TASX) 3,453.34 0.29%
FTSE 100 - Risers
ITV (ITV) 169.90p 2.16%
Marks & Spencer Group (MKS) 349.20p 1.19%
Bunzl (BNZL) 2,230.00p 1.00%
Micro Focus International (MCRO) 2,460.00p 0.99%
BT Group (BT.A) 285.30p 0.88%
Next (NXT) 5,180.00p 0.78%
Severn Trent (SVT) 2,199.00p 0.69%
Relx plc (REL) 1,628.00p 0.68%
Informa (INF) 670.50p 0.68%
Imperial Brands (IMB) 3,243.50p 0.50%
FTSE 100 - Fallers
Mediclinic International (MDC) 660.00p -3.01%
Standard Chartered (STAN) 716.30p -1.88%
Standard Life Aberdeen (SLA) 421.10p -1.57%
Prudential (PRU) 1,748.00p -1.47%
Antofagasta (ANTO) 928.50p -1.17%
Anglo American (AAL) 1,317.50p -1.16%
Legal & General Group (LGEN) 256.80p -1.04%
CRH (CRH) 2,693.00p -1.03%
Direct Line Insurance Group (DLG) 365.70p -1.03%
Barclays (BARC) 189.65p -0.99%
FTSE 250 - Risers
Tullow Oil (TLW) 188.10p 5.50%
Mitchells & Butlers (MAB) 254.90p 4.13%
Amec Foster Wheeler (AMFW) 513.50p 3.17%
Wood Group (John) (WG.) 685.00p 2.85%
Weir Group (WEIR) 1,884.00p 2.84%
Ladbrokes Coral Group (LCL) 123.50p 2.57%
Vectura Group (VEC) 102.40p 2.20%
Serco Group (SRP) 115.40p 2.12%
Petrofac Ltd. (PFC) 443.20p 1.93%
Hochschild Mining (HOC) 238.00p 1.93%
FTSE 250 - Fallers
Stobart Group Ltd. (STOB) 272.40p -4.29%
Ashmore Group (ASHM) 332.20p -3.74%
Acacia Mining (ACA) 177.00p -2.59%
Virgin Money Holdings (UK) (VM.) 263.90p -1.75%
esure Group (ESUR) 273.30p -1.69%
Ferrexpo (FXPO) 281.40p -1.64%
Softcat (SCT) 395.70p -1.64%
Sophos Group (SOPH) 541.00p -1.55%
IP Group (IPO) 125.60p -1.49%
Saga (SAGA) 194.10p -1.42%