London close: Stocks shrug off G-7 acrimony, weak economic data
Investors shrugged off an acrimonious G7 meeting at the weekend and weak readings on the economy thanks to positive 'chatter' ahead of Tuesday's historic summit between North Korean leader Kim Jong Un and US President Donald Trump and key central bank meetings later in the week.
The FTSE 100 was up by 0.73% or 56.36 points to 7,737.43, while the pound was down 0.19% against the dollar at 1.33815 and by 0.48% versus the euro to 1.1341, after both UK industrial production and the goods trade balance fell short of expectations.
"Stock markets are broadly positive, despite the turbulence at the G7 meeting at the weekend. Traders seem unfazed by the tough talk from President Trump," said David Madden at CMC Markets UK.
"The markets are likely to stand their ground until there is a formal reaction from other members of the G7. Donald Trump is playing hardball, but he would probably settle for a compromise, and some dealers suspect it is all a ploy to get a better deal for the US in terms of trade."
Helping to buoy sentiment as well were positive remarks from Donald Trump and US Secretary of State, Mike Pompeo, before their summit with Kim, and the Italian finance minister's commitment to the euro at the weekend, with the latter triggering a rally in his country's bonds.
Ahead of that meeting with Kim, the Office for National Statistics reported that UK industrial output declined in April at the fastest rate in five and a half years, with the trade deficit also widening as exports fell by more than imports.
Industrial production fell 0.8% compared to March versus economists' expectations for an increase of 0.1%, the same as in March. Year-on-year, industrial production was only up 1.8%, down from a 2.9% rise the month before and well short of the 3.1% that was expected, leaving quarterly growth at -0.8% in April, after a marginal rise in the first quarter.
A fall in manufacturing output for the third month in a row was the main cause, with a 1.4% month-on-month drop in April, worsening from the 0.1% fall a month before and with the biggest reverse since October 2012 putting it some distance from the 0.3% growth that had been forecast. For the second quarter so far, the growth rate at -0.5% following a 0.2% increase in the first quarter.
There was a modicum of good news in that construction output rose 0.5% month-on-month in April on a seasonally adjusted basis, bouncing back from a 2.3% decline the prior month, but this was well short of the 2.2% rally the market had pencilled in.
Finally, the UK trade deficit widened to £5.28bn in April from £3.22bn, bigger than the £2.5bn deficit expected, as exports of goods and services both declined. Trade with the US in particular saw the weakest deficit since 2002.
Investors were also looking ahead to a very busy week that includes the release of the UK unemployment rate, claimant count and average earnings on Tuesday, inflation figures on Wednesday and retail sales the day after.
More broadly, central bank events will be in focus, with the Federal Reserve expected to hike rates this week for the second time this year, the Bank of Japan expected to leave them on hold and the European Central Bank forecast to make an announcement on tapering.
In corporate news, satellite company Inmarsat rocketed after saying on Friday that it had received and rejected a bid approach from US rival EchoStar on the basis that it "very significantly undervalued" the group and its prospects.
BCA Marketplace, the car auction house and owner of WeBuyAnyCar.com, surged after it rejected an approach from private equity group Apax Partners, which is mulling a potential buyout of the company.
NMC Health rallied after announcing that it will form a joint venture with Hassana Investment Co to create a new private healthcare platform in Saudi Arabia.
Vodafone gained after saying it will cut its Vodacom stake to 60.5% from 64.5% following Vodacom's plans to issue shares.
Elsewhere, Rolls-Royce, which is expected to reveal more than 4,000 job cuts this week, declined after saying it will carry out more tests on some Trent 1000 engines that are used by Boeing after it identified a durability issue.
HSBC retreated after it announced plans to invest between $15bn and $17bn in growth and technology as it gets back into "growth mode".
Old Mutual slipped as it said its IPO range for wealth management arm Quilter was set at 125p to 155p per share.
In broker note action, plumbing and heating parts supplier Ferguson, formerly Wolseley, was on the rise as JPMorgan Cazenove bumped its price target on the stock to 6,550p from 6,250p, while Ocado got a boost from an upgrade to 'outperform' from 'underperform' at Bernstein and to 'buy' from 'neutral' at Goldman Sachs.
Rentokil was lifted to 'buy' at HSBC, but Aggreko was hit by an initiation at 'sell' by Liberum. Ophir Energy was cut to 'hold' at Jefferies, while Rio Tinto was downgraded to 'hold' at Deutsche Bank. Segro and British Land were both reduced to 'hold' by Peel Hunt and Experian was downgraded to 'hold' at Deutsche Bank.
Market Movers
FTSE 100 (UKX) 7,737.43 0.73%
FTSE 250 (MCX) 21,318.77 0.75%
techMARK (TASX) 3,549.62 0.56%
FTSE 100 - Risers
Evraz (EVR) 537.00p 7.53%
NMC Health (NMC) 3,566.00p 3.84%
Marks & Spencer Group (MKS) 297.70p 2.66%
Standard Chartered (STAN) 745.70p 2.63%
British American Tobacco (BATS) 3,746.50p 2.48%
easyJet (EZJ) 1,745.00p 1.84%
WPP (WPP) 1,240.00p 1.81%
Smith (DS) (SMDS) 565.60p 1.76%
St James's Place (STJ) 1,216.50p 1.76%
Bunzl (BNZL) 2,309.00p 1.72%
FTSE 100 - Fallers
Old Mutual (OML) 218.60p -1.89%
Mediclinic International (MDC) 543.60p -1.31%
Barratt Developments (BDEV) 579.00p -1.19%
Severn Trent (SVT) 1,915.50p -1.11%
Taylor Wimpey (TW.) 189.45p -0.84%
Fresnillo (FRES) 1,209.00p -0.74%
Persimmon (PSN) 2,866.00p -0.69%
Morrison (Wm) Supermarkets (MRW) 244.60p -0.65%
Experian (EXPN) 1,870.00p -0.64%
Centrica (CNA) 144.60p -0.62%
FTSE 250 - Risers
Inmarsat (ISAT) 534.00p 12.68%
BCA Marketplace (BCA) 236.00p 11.85%
Ocado Group (OCDO) 1,111.00p 11.17%
TalkTalk Telecom Group (TALK) 118.00p 9.16%
Wizz Air Holdings (WIZZ) 3,569.00p 3.39%
Dunelm Group (DNLM) 572.50p 3.25%
Kier Group (KIE) 1,019.00p 3.05%
Thomas Cook Group (TCG) 114.20p 2.98%
SSP Group (SSPG) 671.60p 2.49%
Entertainment One Limited (ETO) 340.00p 2.47%
FTSE 250 - Fallers
Alfa Financial Software Holdings (ALFA) 205.00p -2.84%
Grafton Group Units (GFTU) 777.00p -2.57%
Ted Baker (TED) 2,386.00p -2.37%
Capita (CPI) 153.00p -2.37%
Euromoney Institutional Investor (ERM) 1,412.00p -2.35%
Redrow (RDW) 612.00p -2.16%
Savills (SVS) 928.00p -2.06%
Telecom Plus (TEP) 1,080.00p -2.00%
Aggreko (AGK) 671.40p -1.81%
Contour Global (GLO) 222.00p -1.77%