London close: UK shares outshine European peers as pound suffers
London's FTSE 100 was the only major European index not to slide into the red on Thursday as the pound took another beating, but little headway was made due to losses in the mining sector and renewed trade concerns.
The UK blue chip benchmark finished 0.1% higher at 7,683.97 as sterling fell 0.6% against the dollar to 1.2987, having dropped to a 10-month low just after data from the Office for National Statistics showed UK retail sales fell back in June as the World Cup and hot weather saw consumers steer clear of high street shops.
The pound, which this week alone has been savaged by political woes, a drop in wage growth, stalling inflation and now retail sales, was also down 0.4% against the euro at 1.1189.
In the three months to June 2018, retail sales increased 2.1%, the largest improvement since February 2015. Food stores saw the strongest three-month on three-month growth since May 2001, at 2.2%.
But in June, the upward trend came to an abrupt halt, with overall sales declining 0.5% against the previous month. Most analysts had been expecting a monthly rise of around 0.2%. Year-over-year growth declined to 2.9% from 4.1% in May, which was also below the consensus, of around 3.5%
Kathleen Brooks, research director at Capital Index, said: "Although retail sales figures can be volatile, there is a growing sense that the UK economy is slowing down sharply, and with the political backdrop deteriorating, the Bank of England needs to have a pretty solid reason for hiking rates when it meets next month."
Elsewhere on the continent and across the North Atlantic, concerns about another trade skirmish hit stocks, as the European Union and the US prepared for talks. EU officials are travelling to Washington next week to discuss trade, but US President Donald Trump warned that the bloc faces “tremendous retribution” if the talks do not work out, with EU trade commissioners also saying they were drawing up their own naughty list of potential tariffs.
Meanwile, new Brexit secretary Dominic Raab, who was appointed after predecessor David Davis resigned in protest at the Prime Minister's trade and customs plans, arrived in Brussels to hold his first talks with the EU's chief negotiator Michel Barnier. Theresa May will herself make a visit to the Irish border.
Barnier told Raab that there is “a lot of work to do” to get a Brexit deal ready by the autumn, while Raab said he would bring "vigour and vim" into discussions. "I’m looking forward to intensifying, heating up the negotiations, and making sure we’re in the best position to get the best deal."
The weaker pound didn't do much in terms of injecting life into the FTSE, with mining stocks, which have a heavy weighting in the index, retreating as a stronger dollar weighed on metals prices. Antofagasta, Anglo American and BHP Billiton were all weaker.
Anglo slipped even as it reported a 6% year-on-year rise in total second-quarter output on a copper equivalent basis, excluding disruption after a leak at its Brazilian Minas-Rio iron ore project.
SSE dropped after it said first-quarter operating profits would take an £80m hit due to Britain's hot summer and "persistently high gas prices" combining to cut renewable output, customers using less energy and increased costs. The utility added that fully year results could also be hit.
Babcock tumbled as the defence contractor cut its full-year revenue growth target, while Mike Ashley's Sports Direct slid after it reported a 73% slump in annual profits as it took an £85.4m hit on its Debenhams holding.
WPP suffered the heaviest losses fell after French advertising peer Publicis posted an unexpected decline in second-quarter sales.
US-focused equipment rental firm Ashtead was lower on the back of the latest trading update from US rival United Rentals overnight, which seemed to disappoint the market.
On the upside, Unilever reversed earlier losses to trade up after it said underlying sales growth slowed in the second quarter due to the impact of a truckers' strike in Brazil but the company remained confident of hitting full year targets.
Price comparison website Moneysupermarket surged as it posted a rise in interim profit and revenue and announced plans for a new mortgage business.
Big Yellow ticked a touch higher as the self-storage group said like-for-like revenues in the first quarter rose by 7.6% to £29.9m.
Hilton Food advanced as it said trading in the 28 weeks to 15 July was in line with its expectations, while Capita rallied after saying it has been awarded a five-year contract by Southern Water that will see the outsourcer become its new customer services managed service provider.
Vedanta Resources and Tritax Big Box were on the back foot as their stock went ex-dividend.
In broker note action, Shell was lifted to outperform' at Raymond James while Sports Direct was upgraded to 'buy' at Liberum.
Market Movers
FTSE 100 (UKX) 7,683.97 0.10%
FTSE 250 (MCX) 20,907.16 -0.37%
techMARK (TASX) 3,595.14 -0.10%
FTSE 100 - Risers
Unilever (ULVR) 4,330.50p 3.03%
Imperial Brands (IMB) 2,905.50p 1.86%
Coca-Cola HBC AG (CDI) (CCH) 2,801.00p 1.85%
BP (BP.) 569.90p 1.37%
Royal Dutch Shell 'B' (RDSB) 2,744.00p 1.24%
Royal Dutch Shell 'A' (RDSA) 2,659.00p 1.22%
NMC Health (NMC) 3,770.00p 1.13%
Kingfisher (KGF) 318.10p 1.11%
Barratt Developments (BDEV) 530.20p 1.07%
Prudential (PRU) 1,794.00p 1.01%
FTSE 100 - Fallers
Anglo American (AAL) 1,622.00p -4.08%
Melrose Industries (MRO) 218.10p -3.28%
Ashtead Group (AHT) 2,340.00p -2.99%
WPP (WPP) 1,141.00p -2.93%
Evraz (EVR) 523.00p -2.82%
easyJet (EZJ) 1,642.00p -2.75%
SSE (SSE) 1,352.00p -2.35%
Antofagasta (ANTO) 942.40p -2.34%
BHP Billiton (BLT) 1,637.80p -1.85%
Barclays (BARC) 185.52p -1.79%
FTSE 250 - Risers
Moneysupermarket.com Group (MONY) 328.40p 6.18%
Ferrexpo (FXPO) 171.35p 5.19%
Hikma Pharmaceuticals (HIK) 1,548.00p 4.91%
Rank Group (RNK) 184.00p 4.66%
McCarthy & Stone (MCS) 104.10p 3.58%
Superdry (SDRY) 1,365.00p 3.25%
Stagecoach Group (SGC) 169.10p 2.98%
Fisher (James) & Sons (FSJ) 1,930.00p 2.66%
Playtech (PTEC) 521.00p 2.08%
Greene King (GNK) 537.00p 2.01%
FTSE 250 - Fallers
Babcock International Group (BAB) 732.60p -8.77%
Sports Direct International (SPD) 405.00p -7.13%
AA (AA.) 107.55p -5.74%
Bank of Georgia Group (BGEO) 1,799.00p -5.22%
TalkTalk Telecom Group (TALK) 109.88p -5.11%
Elementis (ELM) 258.20p -4.44%
Vedanta Resources (VED) 775.80p -4.08%
Kaz Minerals (KAZ) 796.40p -3.65%
Thomas Cook Group (TCG) 98.05p -3.30%
IntegraFin Holding (IHP) 388.00p -3.24%