London close: Stocks succumb to selling as Russia controversy envelops US administration
London stocks ended the Friday session on a down note as reports began to break that ex-US national security agency chief Michael Flynn might testify against his previous boss, the US president.
The FTSE finished 0.36% or 26.18 points lower to 7,300.49, while the pound was down by 0.1% against the euro at 1.1341 and 0.1% lower versus the dollar at 1.3511, although the latter was well off its intra-day lows as the US dollar weakened.
Friday's late spike in risk aversion was especially clear in government bond markets, with the yield on the benchmark 10-year Gilt down by an outsized ten basis points to 1.23%.
Earlier, Flynn pleaded guilty to charges that he lied to the Federal Bureau of Investigation regarding conversations with the Russian ambassador as part of the new administration's transition following their election victory.
That was followed by a report from ABC according to which Flynn had agreed to testify against Trump.
Back home, reported activity in the UK manufacturing sector picked up in November, hitting its highest level since August 2013, according to a survey released earlier.
The Markit/CIPS manufacturing purchasing managers' index rose to 58.2 from October's 56.6, which was revised up from 56.3. This marked a 51-month high and was ahead of analysts' expectations for a reading of 56.5.
A reading above 50.0 indicates expansion, while a reading below signals contraction.
Manufacturing production expanded at the fastest pace since September 2016 and to one of the greatest extents during the past four years. This was attributed to stronger inflows of new orders, reflecting solid domestic demand and steeper gains in new export business.
Howard Archer, chief economic adviser at the EY ITEM Club, said "The outlook for manufacturing appears mixed. Domestic conditions look challenging despite November’s healthy orders. Increased prices for capital goods and big-ticket consumer durable goods, weakened consumer purchasing power, and economic and political uncertainty threaten to hamper manufacturers. Businesses’ willingness to invest and buy capital goods is being tested by persistent weak UK economic activity as well as Brexit uncertainties."
On the export side, Archer noted that the very competitive pound and healthy global demand were helping UK manufacturers compete in foreign markets.
"The weakened pound also appears to be encouraging some companies to switch to domestic sources for supplies. Significantly, the Bank of England regional agents reported in their November survey of business conditions that some manufacturers reported increased sourcing from domestic customers."
Investors were also mulling news that the US Senate late on Thursday delayed a vote on the Republicans' tax reform bill until Friday due to problems with an amendment to address a large expansion of the federal budget deficit that is expected to result from the measure.
In corporate news, Royal Bank of Scotland was in the red after saying it will close 259 branches and cut 680 jobs as customers shift to online banking. Barclays and Lloyds also traded lower.
Barclays was also in focus after it completed the sale of a 7.0% stake in Barclays Africa Group Limited to bring down its total shareholding to 14.9%.
Countryside Properties was on the back foot after private equity firm Oaktree Capital - its largest shareholder - sold a 15% stake in the group.
Indivior bucked trend, surging as it received approval from the US drug regulator to market its once-monthly injectable treatment for moderate to severe opioid use disorder, which analysts believe could lift company sales well north of $1bn.
In broker note action, Royal Mail was dented by a downgrade to 'sell' from 'hold' at Deutsche Bank, while Babcock International was under the cosh after Morgan Stanley downgraded the stock to 'equalweight' from 'overweight' and slashed its target price.
Pendragon was lower as JPMorgan initiated coverage of the stock at 'underweight', while Vesuvius was hit by an initiation at 'underweight' by Barclays.
FTSE 100 - Risers
Convatec Group (CTEC) 199.50p 2.84%
British American Tobacco (BATS) 4,784.50p 2.04%
Anglo American (AAL) 1,384.00p 1.84%
Randgold Resources Ltd. (RRS) 6,885.00p 1.62%
easyJet (EZJ) 1,425.00p 1.35%
Fresnillo (FRES) 1,308.00p 1.32%
Paddy Power Betfair (PPB) 8,430.00p 1.26%
GlaxoSmithKline (GSK) 1,290.00p 0.82%
Pearson (PSON) 713.50p 0.78%
Tesco (TSCO) 195.50p 0.75%
FTSE 100 - Fallers
Associated British Foods (ABF) 2,870.00p -2.65%
Severn Trent (SVT) 2,046.00p -2.53%
Prudential (PRU) 1,815.00p -2.37%
Royal Bank of Scotland Group (RBS) 270.10p -2.35%
SSE (SSE) 1,338.00p -2.26%
Smurfit Kappa Group (SKG) 2,301.00p -2.25%
Scottish Mortgage Inv Trust (SMT) 440.60p -2.22%
Rolls-Royce Holdings (RR.) 838.00p -2.22%
G4S (GFS) 251.10p -2.14%
Barclays (BARC) 189.40p -2.12%
FTSE 250 - Risers
Inmarsat (ISAT) 507.00p 4.99%
Wizz Air Holdings (WIZZ) 3,469.00p 3.35%
Tullow Oil (TLW) 184.20p 3.19%
Ocado Group (OCDO) 363.50p 3.09%
Cairn Energy (CNE) 217.90p 3.03%
Indivior (INDV) 382.00p 3.02%
P2P Global Investments (P2P) 813.50p 2.92%
Go-Ahead Group (GOG) 1,598.00p 2.83%
Petrofac Ltd. (PFC) 432.30p 2.78%
Dixons Carphone (DC.) 162.70p 2.39%
FTSE 250 - Fallers
Countryside Properties (CSP) 338.00p -7.27%
Dignity (DTY) 1,624.00p -6.24%
Computacenter (CCC) 1,078.00p -4.26%
Travis Perkins (TPK) 1,544.00p -4.04%
Royal Mail (RMG) 424.60p -3.91%
Grafton Group Units (GFTU) 743.75p -3.76%
Renishaw (RSW) 5,125.00p -3.57%
Sophos Group (SOPH) 548.50p -3.52%
Pets at Home Group (PETS) 168.30p -3.50%
Fisher (James) & Sons (FSJ) 1,572.00p -3.49%