London close: Stocks extend gains as pound falls back
The top flight index extended its recent gains as the pound fell further after data showed that growth in the UK manufacturing sector eased back more than expected last month, with airlines and housebuilders on a tear.
The FTSE 100 was up 0.90% to 7,438.84, while the pound was down 0.98% against the dollar at 1.3265 and 0.41% weaker versus the euro at 1.1294. The top-flight index tends to benefit from a weaker pound as around 70% of its constituents derive most of their earnings from abroad.
The Markit/CIPS manufacturing purchasing managers' index fell to 55.9 in September from August's four-month high of 56.7, missing economists' expectations for a smaller decline to 56.4, with growth slower across the consumer, intermediate and investment goods industries. Still the index remained about the 50 mark that separates contraction from expansion and above its long-run average of 51.7.
The survey revealed that input price inflation rose to a six-month high in September, reflecting a combination of rising commodity prices, the exchange rate and increased supply-chain pressures.
David Cheetham, chief market analyst at XTB, said: "The data point itself is still fairly strong and even though it missed consensus forecasts it shouldn’t be enough of a reason on its own to cause a sustained drop in the pound. The service sector equivalent, released this Wednesday, is more widely viewed and the flow in sterling of late remains of the feel of a pullback following the surge higher in mid-September rather than a major reversal."
Investors were digesting data out of China over the weekend which showed that factory activity expended at the fastest pace in five years in September, with the official manufacturing PMI coming in at 52.4 from 51.7 in August. This marked the highest level since April 2012.
Spain was also in the spotlight as the IBEX index fell sharply after Catalans voted for independence in a referendum that was deemed illegal by Madrid. More than 800 people were hurt on Sunday as riot police clashed with protesters and civilians going to cast their ballots.
London-listed housebuilders were the standout gainers after Prime Minister Theresa May said the government will find an extra £10bn for the Help to Buy scheme to let another 135,000 people get on the property ladder. Barratt Developments, Persimmon, Taylor Wimpey, Berkeley, Bovis, McCarthy & Stone, Bellway, Redrow and Crest Nicholson all racked up impressive gains.
Airlines were also flying higher after the demise of Monarch, with easyJet, Ryanair, Wizz Air and British Airways and Iberia parent International Consolidated Airlines Group all firmer.
Elsewhere, Indivior was on the front foot after it submitted a new drug application in the US for a once-monthly injectable schizophrenia treatment and agreed to buyout patent rights from a manufacturer of similar antipsychotic medication.
Lloyd's of London insurer Hiscox rose after saying net claims from hurricanes Harvey and Irma were likely to total around $225mm based on an insured market loss of $35bn.
Kaz Minerals gained ground after it said that following continued commissioning progress, the Aktogay sulphide plant has been declared commercial.
On the downside, Tritax Big Box slipped as it announced that it has exchanged contracts to acquire a national distribution centre at Danes Way, Daventry International Rail Freight Terminal in Northamptonshire, let to Royal Mail Group.
Assura nudged down despite saying it continued to make "good progress" for the six months to the end of September.
In broker note action, temporary power supplier Aggreko slumped as Berenberg downgraded the stock to 'sell' from 'hold' but Mondi was boosted as Jefferies reaffirmed its 'buy' rating.
Market Movers
FTSE 100 (UKX) 7,438.84 0.90%
FTSE 250 (MCX) 19,957.06 0.41%
techMARK (TASX) 3,523.11 0.96%
FTSE 100 - Risers
easyJet (EZJ) 1,280.00p 5.18%
Barratt Developments (BDEV) 640.50p 4.23%
Persimmon (PSN) 2,690.00p 4.18%
Centrica (CNA) 193.00p 3.21%
Shire Plc (SHP) 3,909.00p 3.19%
Mondi (MNDI) 2,064.00p 2.94%
Glencore (GLEN) 350.80p 2.57%
International Consolidated Airlines Group SA (CDI) (IAG) 607.50p 2.36%
Rio Tinto (RIO) 3,552.50p 2.29%
Convatec Group (CTEC) 280.00p 2.23%
FTSE 100 - Fallers
Mediclinic International (MDC) 643.00p -1.08%
CRH (CRH) 2,811.00p -0.92%
ITV (ITV) 173.30p -0.80%
Paddy Power Betfair (PPB) 7,355.00p -0.74%
Aviva (AV.) 511.00p -0.68%
Direct Line Insurance Group (DLG) 361.20p -0.66%
Ferguson (FERG) 4,864.00p -0.65%
Old Mutual (OML) 193.10p -0.57%
Imperial Brands (IMB) 3,166.00p -0.57%
St James's Place (STJ) 1,141.00p -0.44%
FTSE 250 - Risers
Wizz Air Holdings (WIZZ) 3,000.00p 4.86%
Crest Nicholson Holdings (CRST) 573.50p 3.71%
Bovis Homes Group (BVS) 1,133.00p 3.56%
Redrow (RDW) 612.50p 3.38%
Entertainment One Limited (ETO) 265.90p 3.06%
McCarthy & Stone (MCS) 154.20p 2.94%
Electrocomponents (ECM) 638.50p 2.82%
ZPG Plc (ZPG) 371.80p 2.79%
IP Group (IPO) 140.20p 2.55%
Fidelity China Special Situations (FCSS) 221.60p 2.53%
FTSE 250 - Fallers
Greencore Group (GNC) 182.00p -7.24%
Nex Group (NXG) 625.00p -5.59%
Aggreko (AGK) 887.50p -5.48%
Tullow Oil (TLW) 179.40p -3.60%
P2P Global Investments (P2P) 785.00p -2.48%
Cairn Energy (CNE) 186.80p -2.45%
QinetiQ Group (QQ.) 241.50p -2.19%
John Laing Infrastructure Fund Ltd (JLIF) 126.40p -2.16%
Euromoney Institutional Investor (ERM) 1,143.00p -1.96%
Hochschild Mining (HOC) 225.00p -1.96%