London midday: Stocks bounce back despite services slide
London stocks were bouncing back on Friday, led by banks and tech-related stocks and ahead of a meeting between Prime Minister Theresa May and her French counterpart, Emmanuel Macron, and the US jobs report.
Not long after midday the FTSE 100 was trading 68 points higher or 0.9% at 7,644.19, with the mid-cap FTSE 250 index up 0.7% 20,695.88.
Overseas-focused blue chips were boosted by a fall in the pound on the back of a disappointing start to the third quarter for the services sector.
The IHS Markit's purchasing managers' index slipped from a reading of 55.1 for June to 53.5 in July, missing the consensus forecast for a reading of 54.7 by a wide margin. Brexit-related uncertainties, the recent World Cup and drier weather were said to have acted as a drag.
Growth in output and new orders both decelerated for the country's key sector, though input cost growth slowed but remain at elevated levels.
Earlier, stocks across Europe started on the front foot on the back of Apple's ascent to becoming the first $1trn company, which lifted the tech sector and enabled a positive finish on Wall Street.
Market analyst Japer Lawler at London Capital Group said this overshadowed escalating trade tensions, after China promised a retaliation if Trump pushed ahead with higher tariffs.
Furthermore, with just 11 weeks to go to the date by when Brexit negotiators on both sides want a deal to be signed, there were various reports that Brussels was now prepared to compromise on post-Brexit arrangements for the Irish border, making a deal on the Withdrawal Bill before October more likely.
Nevertheless, ongoing weakness in the Chinese yuan was reminding investors that a full-blown trade war might soon become a reality, with the US dollar initially gaining 0.46% versus the Chinese currency.
That was until China’s central bank was reported by Bloomberg to have raised the reserve requirement for forward trading foreign currency to 20%, having last September effectively removed the requirement after its biggest two-week surge in at least a decade. But this only saw the yuan perk up slightly, rising 0.2% against the dollar to 6.8325
Very much on investors' minds as well was the US non-farm payrolls report for July which was set for release at 1330 BST, with the consensus anticipating an increase of 193,000, which should suffice to lower the unemployment rate from 4.0% to 3.9%.
In corporate news, Royal Bank of Scotland pleased investors with its first dividend in 10 years despite a inconsistent set of first half results. The taxpayer-owned bank reported second-quarter operating profits that halved to £613m compared to the first quarter and the second quarter last year, but this was much better than expected, with City analysts having pencilled in a loss of £340m.
Paper manufacturer Mondi led the FTSE 100 as it reported a 6% rise in interim pre-tax profits of €490m (£436m) due to higher average selling prices and solid demand across its packaging businesses.
The US tech spike gave a boost to Scottish Mortgage Investment Trust, which is predominantly invested in US and Chinese digital stocks, although has no large direct exposure to Apple.
Product testing company Intertek said it was buying US-based software provider Alchemy for $480m (£368.8m) in cash. The Texas-based firm was said to be an "industry leader in people assurance solutions for the food industry".
Cobham climbed even though sales slumped over the first half of the year as it ran into trouble with Boeing on the KC-46 tanker programme. But following divestments during the period, management argued that the resulting company was now more focused and the balance sheet stronger.
Plastics supplier Essentra was boosted as said returned to profit growth, unveiling a 7% rise in half-year pre-tax profits to £21m as revenue fell to £513.1m from £522.6m, but was unchanged on a like-for-like basis.
IAG flew lower as it issued its results for the six months ended 30 June on Friday, reporting second-quarter operating profit of €835m before exceptional items, up from a restated €790m a year ago but below consensus forecasts. The FTSE 100 owner of British Airways said it was still interested in low-cost rival Norwegian Air.
William Hill was a big faller reported a £819.6m loss before tax for the 26 weeks to 27 June, down from a £93.1m profit a year earlier. This included £882.8m non-cash impairment taken as a result of the government's triennial review into FOBTs and also £29.9m of exceptional costs relating to restructuring, which is expected to see further costs of around £15m in the second half.
AstraZeneca and Merck said the European Medicines Agency (EMA) has granted orphan designation to selumetinib, a MEK 1/2 inhibitor, for the treatment of neurofibromatosis type 1 (NF1) an incurable genetic condition that affects one in 3,000 newborns worldwide.
Market Movers
FTSE 100 (UKX) 7,632.73 0.75%
FTSE 250 (MCX) 20,661.00 0.55%
techMARK (TASX) 3,584.83 0.94%
FTSE 100 - Risers
Mondi (MNDI) 2,197.00p 6.03%
Royal Bank of Scotland Group (RBS) 259.00p 3.56%
Rolls-Royce Holdings (RR.) 1,095.00p 3.50%
Scottish Mortgage Inv Trust (SMT) 547.50p 3.01%
Rentokil Initial (RTO) 328.00p 2.50%
Standard Chartered (STAN) 689.20p 2.29%
Smurfit Kappa Group (SKG) 3,222.00p 2.16%
Micro Focus International (MCRO) 1,225.50p 2.08%
Smith (DS) (SMDS) 501.80p 2.03%
Schroders (SDR) 3,136.00p 2.02%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 662.60p -3.27%
BAE Systems (BA.) 626.88p -1.06%
Morrison (Wm) Supermarkets (MRW) 259.80p -0.50%
Lloyds Banking Group (LLOY) 62.53p -0.29%
Compass Group (CPG) 1,629.50p -0.21%
Sky (SKY) 1,518.50p -0.07%
RSA Insurance Group (RSA) 628.80p -0.06%
easyJet (EZJ) 1,529.50p -0.03%
Fresnillo (FRES) 992.80p -0.02%
Royal Dutch Shell 'B' (RDSB) 2,585.30p 0.03%
FTSE 250 - Risers
Essentra (ESNT) 506.00p 5.07%
Coats Group (COA) 83.50p 4.51%
Inmarsat (ISAT) 561.20p 4.35%
Cobham (COB) 129.20p 3.73%
Premier Oil (PMO) 122.85p 3.58%
Alfa Financial Software Holdings (ALFA) 169.40p 3.55%
Weir Group (WEIR) 1,916.00p 3.12%
Galliford Try (GFRD) 941.50p 3.07%
Aveva Group (AVV) 2,706.00p 2.73%
Wood Group (John) (WG.) 654.80p 2.70%
FTSE 250 - Fallers
William Hill (WMH) 270.60p -7.42%
Contour Global (GLO) 220.00p -3.51%
Capita (CPI) 129.45p -3.11%
Travis Perkins (TPK) 1,101.00p -2.82%
Stobart Group Ltd. (STOB) 216.00p -1.59%
TI Fluid Systems (TIFS) 254.00p -1.55%
Millennium & Copthorne Hotels (MLC) 516.00p -1.53%
Hikma Pharmaceuticals (HIK) 1,638.50p -1.30%
CYBG (CYBG) 345.20p -1.15%
IG Group Holdings (IGG) 926.50p -0.96%