London midday: Stocks steady after Monday's losses; pound dips on Brexit news
London stocks were still a little firmer by midday on Tuesday after the selloff in the the previous session, while sterling lost ground following reports of another setback in Brexit talks.
The FTSE 100 was up 0.3% at 6,434.50, while the FTSE 250 was 0.9% firmer at 19,923.61.
Meanwhile, the pound was 0.3% lower against the dollar at 1.3427 and 0.4% weaker versus the euro at 1.0956 after the European Union reportedly rejected the UK’s latest concessions on fishing.
On Monday, the UK made a proposal that would see the EU reduce the value of the fish it catches in UK waters by 30%, down from the 60% cut it was insisting the EU accept last week. However, sources cited by Bloomberg said the offer has been rejected.
According to Reuters, EU Brexit negotiator Michel Barnier will update EU member states on Brexit talks at 3pm.
The UK and the EU have until 31 December to agree a trade deal. On Monday, the government insisted it would not extend the transition period despite growing calls for the deadline to be pushed back.
Neil Wilson, chief market analyst at Markets.com, said: "There will be a compromise, there has to be.
"It's always going to seem further away until the last leap of faith. It will all happen very quickly when it happens."
There were a few bright spots in the form of US approval of a $900bn Covid relief bill and an upward revision to third-quarter UK GDP.
Figures released earlier by the Office for National Statistics showed that gross domestic product grew by a record 16% in the third quarter, while government borrowing surged last month.
This was up from an initial estimate of 15.5% and means the economy is still 8.6% below where it was at the end of last year, up from an initial estimate of 9.7% below.
Separate data from the ONS showed that government borrowing rose to £31.6bn in November, compared to consensus expectations of £31.4bn. This was a £26bn increase on November 2019, which is both the highest November borrowing and the third-highest borrowing in any month since monthly records began in 1993.
Ruth Gregory, senior UK economist at Capital Economics, said borrowing will probably remain high over the next few months as Covid-19 restrictions stay in place.
"Of course, Q3 and November are old news," she said. "And the possibility that the new Tier 4 Covid-19 restrictions are extended and broadened in the coming months means that the risks to our Q1 GDP forecast (+1.0% q/q) are weighted heavily to the downside."
In equity markets, banks were among the top gainers after heavy losses on Monday, with Lloyds, Barclays and NatWest all higher.
British Airways and Iberia owner IAG, engine maker Rolls-Royce and GKN owner Melrose also gained after sharp falls in the previous session.
Online supermarket Ocado, which rallied on Monday as investors mulled the impact of Tier 4 lockdowns, was the worst performer on the FTSE 100.