London close: Jump in pound after GDP revisions cuts short gains in shares
London's top flight index trimmed its early gains as the pound shot higher following an upward revision to first-quarter UK growth figures.
The FTSE 100 was up by 0.28% or 21.30 points to to 7,636.93 and off earlier highs as sterling rose 0.93% against the dollar to 1.31991 after data.
However, the FTSE 250 fared better, gaining 0.71% o 146.81 points o 20,830.97.
In parallel, the implied probability of an August hike in Bank Rate rose from 50% to 60%.
A final reading on UK gross domestic product was revised higher, up to 0.2% on a quarter-by-quarter basis from the initial 0.1% reading but still short of the 0.3% rate that the Bank of England's monetary policy committee calculated. Compared to last year, GDP was 1.2% higher, the same slowdown that was initially indicated from the 1.3% rate in the fourth quarter.
The final GDP reading showed revisions to construction output helped push growth higher on a quarter-on-quarter basis, as households borrowed more and saved less in the first quarter. The ONS said later construction data and significantly improved methods for measuring the sector had nudged up growth.
Oanda analyst Craig Erlam said: "The upward revision goes some way to confirming the view of the Bank of England that the first quarter wasn't as bad as it initially appeared and gives further reason to follow through on plans to raise rates even if that may come a few months after initially intended.
"The data comes on top of improvements to other economic indicators for the UK and the meeting last week in which Andy Haldane became the third policy maker to vote in favour of a hike. Markets are currently pricing in a 56% chance of a rate hike at the next meeting in August, something that should increase if we continue to see these improvements in the data before then."
Sterling fared less well against the euro, however, down 0.04% to 1.1301 as the single currency was boosted by news that EU leaders at the summit in Brussels reached a deal on migration in the early hours of Friday, relieving pressure on German Chancellor Angela Merkel, whose coalition was teetering on the brink of collapse over the country's role in the refugee crisis.
As part of the deal, which is voluntary, new migrant centres would be set up in EU countries to process migrants and determine those who are genuine refugees, with those deemed "irregular" returned. The leaders also agreed to tighten their external border and increase financing and local assistance for Turkey, Morocco and North African states to prevent migration to Europe.
In other UK data, the latest survey from GfK showed consumer confidence in the UK fell in June as Britons grew increasingly gloomy about the economy. GfK's long-running consumer confidence index fell two points this month to -9, missing expectations for it to remain unchanged at -7 and with all five of the key measures dropping.
Figures from the Bank of England, meanwhile, showed that UK mortgage approvals rose to a four-month high in May. The number of mortgages approved increased to 64,526 last month from 62,941 in April, beating expectations for 62,200. Meanwhile, the number of approvals for remortgaging rose by 8% to 51,000, marking the highest level since November 2017.
However, annual growth of consumer borrowing, excluding mortgages, slowed to 8.5% in May from 8.7% the month before, hitting its worst level since November 2015. The BoE said that while this growth rate remains elevated, particularly compared to 2009-12, the gradual slowing continues the downward trend in growth since late 2016.
On the corporate front, Micro Focus was the standout gainer as Goldman Sachs put the company on its list of potential mergers and acquisitions.
BAE Systems advanced after saying it has been awarded an AUD35bn (£20bn) contract by the Australian government to build its fleet of nine new navy frigates. Other defence related companies, including Rolls-Royce, which supplies propellers and other parts to the Type 26 frigates, and Melrose, were higher on reports that the Ministry of Defence is confident it will be able to wring a larger budget from the Treasury.
BHP Billiton gained as it agreed to pay $158m to a fund set up in Brazil to deal with remediation and compensation from the 2015 bursting of the Samarco tailings dam that killed 19 people.
Indivior ticked up after a US court extended its temporary restraining order blocking Dr Reddy's Laboratories from launching a generic version of its opioid addiction treatment in the US prior to a decision on a full injunction.
Elsewhere, British American Tobacco as lowe as Australia won in a major trade dispute over its pioneering tobacco plain packaging law, after a panel of judges at the World Trade Organisation rejected arguments from Cuba, Indonesia, Honduras and the Dominican Republic that the laws violated international trade.
John Laing rose after maintaining its full-year investment commitments at around £250m.
On the downside, outsourcer Serco slumped as it said it was still on track for underlying profit of £80m for 2018 but cut its revenue guidance.
Elementis tumbled after the specialty chemicals group announced plans to buy Netherlands-based Mondo Minerals from Advent International for an enterprise value of $600m.
In broker note action, BAE was upgraded to 'neutral' at JPMorgan, while Hunting was cut to 'underweight' at Morgan Stanley and Diageo was downgraded to 'market perform' at Bernstein.
Johnson Matthey got a boost as Credit Suisse lifted its price target on the outperform-rated stock to 4,200p from 4,000p.
Market Movers
FTSE 100 (UKX) 7,636.93 0.28%
FTSE 250 (MCX) 20,830.97 0.71%
techMARK (TASX) 3,522.21 1.02%
FTSE 100 - Risers
Micro Focus International (MCRO) 1,323.50p 3.89%
Anglo American (AAL) 1,694.80p 3.59%
Rolls-Royce Holdings (RR.) 988.20p 2.98%
BAE Systems (BA.) 646.80p 2.34%
Ashtead Group (AHT) 2,273.00p 2.20%
Melrose Industries (MRO) 212.70p 2.16%
Rentokil Initial (RTO) 350.80p 2.15%
Schroders (SDR) 3,158.00p 1.94%
Coca-Cola HBC AG (CDI) (CCH) 2,531.00p 1.77%
Smurfit Kappa Group (SKG) 3,066.00p 1.52%
FTSE 100 - Fallers
Old Mutual Limited NPV (DI) (OMU) 150.40p -1.84%
Carnival (CCL) 4,347.00p -1.54%
British American Tobacco (BATS) 3,830.00p -1.21%
Whitbread (WTB) 3,959.00p -0.90%
Centrica (CNA) 157.65p -0.88%
BP (BP.) 578.30p -0.72%
Royal Dutch Shell 'A' (RDSA) 2,629.00p -0.70%
Royal Dutch Shell 'B' (RDSB) 2,722.11p -0.55%
Next (NXT) 6,050.00p -0.53%
Diageo (DGE) 2,722.00p -0.51%
FTSE 250 - Risers
Equiniti Group (EQN) 247.00p 5.33%
Renewi (RWI) 78.00p 4.70%
Rank Group (RNK) 192.20p 4.48%
Genus (GNS) 2,636.00p 4.35%
John Laing Group (JLG) 275.60p 4.31%
Sophos Group (SOPH) 640.00p 4.24%
Petrofac Ltd. (PFC) 584.40p 3.43%
Energean Oil & Gas (ENOG) 532.00p 3.30%
Sanne Group (SNN) 675.00p 3.22%
Hays (HAS) 186.60p 2.92%
FTSE 250 - Fallers
Elementis (ELM) 252.80p -10.92%
Hunting (HTG) 776.00p -4.79%
Clarkson (CKN) 2,300.00p -4.17%
Telecom Plus (TEP) 1,126.00p -2.93%
F&C Commercial Property Trust Ltd. (FCPT) 151.20p -2.71%
Wood Group (John) (WG.) 627.80p -2.70%
TalkTalk Telecom Group (TALK) 105.00p -2.51%
IP Group (IPO) 126.80p -2.46%
TI Fluid Systems (TIFS) 248.00p -2.36%
Serco Group (SRP) 98.95p -1.93%