London midday: Stocks slip amid Brexit deal doubts
London stocks had slipped into the red by midday on Wednesday amid renewed doubts about a Brexit deal, while souring relations between the US and China also dented the mood.
The FTSE 100 was down 0.2% at 7,197.37. At the same time, sterling was off 0.5% against the dollar at 1.2730, having surged on Tuesday to its highest level against the greenback since May, and 0.4% weaker versus the euro at 1.1547.
Hopes of a Brexit deal were dashed yet again following a report that negotiations in Brussels were at an impasse. Bloomberg cited two officials as saying that a deal appears impossible at the moment unless the UK government moves its position.
One of the diplomats was quoted as saying that remaining issues can’t be resolved at a technical level and a new mandate from London is needed.
EU and UK officials were set to resume Brexit talks later in the day ahead of a summit of EU leaders on Thursday.
Negotiating teams from the two sides were understood to have agreed in principle to create a customs border down the Irish Sea. After a 90-minute meeting with UK Prime Minister Boris Johnson, the Democratic Unionist Party said in a statement: "We respect the fact negotiations are ongoing therefore cannot give a detailed commentary but it would be fair to indicate gaps remain and further work is required."
The UK is due to leave the EU on 31 October and Johnson has repeatedly insisted that this will be the case regardless of whether a deal is struck.
CMC Markets analyst David Madden said: "Much of the major gains that were made yesterday were driven by the prospect of a deal being achieved, so now some dealers are reversing their positions."
There wasn't much to be cheery about on the trade front either, as China threatened to retaliate after the US House of Representatives on Tuesday passed three bills supporting the rights of pro-democracy protesters in Hong Kong. China's foreign ministry condemned the bills, which still need to pass the Senate for approval.
Analysts at Rabobank said there appears to be sufficient bipartisan support to ensure the bills are passed. Whatever countermeasures China may be planning, "it surely won’t help the longevity of the limited trade truce between the two nations", they said.
With Brexit and trade news hogging the headlines, the latest reading on UK inflation came and went pretty much unnoticed. Figures from the Office for National Statistics showed the headline inflation rate was unchanged at 1.7% in September on an annual basis, below the Bank of England's 2% target and remaining at its lowest rate since December 2016. Economists had expected an uptick to 1.8%.
In equity markets, Hammerson was knocked lower by a downgrade to 'sector perform' at RBC Capital Markets.
Hiscox and Lancashire Holdings were both under pressure after Barclays said in a note on European reinsurance that profit warnings were a possibility from both companies.
Reckitt Benckiser was boosted by a re-initiation at 'buy' at Berenberg, while Go-Ahead was up after an upgrade to 'buy' at HSBC.
Barratt Developments reversed earlier losses to trade a touch higher after the housebuilder said the new financial year had started well, with good demand for new homes, but that it continues to expect to grow volumes towards the lower end of its 3% to 5% medium-term target.
Private healthcare services company Mediclinic rose as said first-half revenue was up around 6.5%.
FTSE 100 - Risers
Relx plc (REL) 1,802.50p 1.69%
Unilever (ULVR) 4,645.00p 1.67%
Reckitt Benckiser Group (RB.) 6,036.00p 1.62%
GlaxoSmithKline (GSK) 1,673.20p 1.06%
AstraZeneca (AZN) 6,956.00p 1.03%
Sage Group (SGE) 702.40p 0.98%
Smith & Nephew (SN.) 1,849.50p 0.82%
Diageo (DGE) 3,189.50p 0.81%
Aveva Group (AVV) 3,862.00p 0.78%
Ferguson (FERG) 6,474.98p 0.76%
FTSE 100 - Fallers
Auto Trader Group (AUTO) 528.40p -4.00%
Hiscox Limited (DI) (HSX) 1,545.50p -3.47%
Kingfisher (KGF) 215.00p -2.98%
St James's Place (STJ) 995.20p -2.91%
Hargreaves Lansdown (HL.) 1,785.50p -2.88%
Next (NXT) 6,610.00p -2.79%
Centrica (CNA) 68.18p -2.66%
British Land Company (BLND) 608.40p -2.34%
Glencore (GLEN) 228.30p -2.29%
Spirax-Sarco Engineering (SPX) 7,370.00p -2.12%
FTSE 250 - Risers
Mediclinic International (MDC) 371.60p 3.80%
Aston Martin Lagonda Global Holdings (AML) 461.50p 3.20%
Domino's Pizza Group (DOM) 265.54p 3.16%
Micro Focus International (MCRO) 1,129.20p 2.97%
Finablr (FIN) 149.00p 2.48%
Marston's (MARS) 115.65p 2.35%
Sanne Group (SNN) 552.00p 2.22%
Rank Group (RNK) 216.10p 1.69%
Coats Group (COA) 71.10p 1.57%
Bank of Georgia Group (BGEO) 1,386.00p 1.54%
FTSE 250 - Fallers
Hammerson (HMSO) 306.40p -4.84%
BBA Aviation (BBA) 304.40p -4.46%
OneSavings Bank (OSB) 382.00p -4.45%
Kainos Group (KNOS) 469.00p -4.29%
BMO Commercial Property Trust Limited (BCPT) 117.80p -3.76%
Investec (INVP) 415.40p -3.57%
Royal Mail (RMG) 208.90p -3.47%
Hunting (HTG) 397.20p -3.36%
Lancashire Holdings Limited (LRE) 679.00p -3.35%
Drax Group (DRX) 289.80p -3.34%