London midday: Stocks pare gains as investors digest services data
London equity markets had pared earlier gains by midday on Tuesday to sit just above the flat-line as disappointing services data and Brexit worries kept the pound under pressure.
The FTSE 100 was up 0.1% to 7,347.27, while the pound was down 0.4% against the dollar at 1.3420 and 0.5% lower versus the euro at 1.1309, weighed by a lack of progress in Brexit talks and data showing that services sector activity last month was weaker than expected.
The UK Markit/CIPS services purchasing managers' index for November fell to 53.8 from 55.6 a month earlier, which was worse than the fall to 55.0 that the market had forecast.
A PMI reading above 50 indicates growth in these widely followed surveys, though economists differ on how reliable this soft data is in predicting the official outcomes.
There was also some disagreement also over whether Tuesday's services PMI pointed to gross domestic product growth remaining at 0.4% in the fourth quarter or slowing to 0.3%.
According to the survey, services growth in November was led by financial services and the hotels and restaurants sectors, while growth waned for business services and transport and communications, with the worst performing sub-sector being IT and computing, which in recent months has endured its worst performance for over five years.
Even after stronger readings from the manufacturing and construction surveys, the UK composite PMI for November fell to 54.9 when the previous month's six-month high of 55.8 had been expected to hold steady.
Ruth Gregory at Capital Economics said the fall in the main services activity balance "simply reversed October’s sharp rise and still left the balance a little higher than Q3’s average of 53.5" and on the basis of past form indicated GDP growth would remain at 0.4% as in the third quarter or even be higher as the strengthening in Markit's future activity index suggested that November’s dip in services sector activity "should just be temporary".
The pound was also being held back by the fact that Brexit talks have hit deadlock again as Theresa May and European Commission president Jean-Claude Juncker were unable to reach a deal on Monday, with issues such as EU citizens' rights, the exit bill and the Irish border still to be resolved.
Members of Northern Ireland DUP were reported to be meeting May's chief whip in Westminster to try and secure a deal on Tuesday, according to newspaper reports.
Supermarkets were the standout gainers on the corporate front, with Tesco and Morrisons boosted by upgrades from Goldman Sachs, and Sainsbury tagging along for the ride after the bank upped its price target on the stock but kept the rating at 'sell'. Goldman said margin pressure in the UK grocery market is easing, adding that while competitive intensity is still high, multiple data points suggest 2018 will see greater industry margin expansion than 2017.
Housebuilders were also on the rise, with Persimmon and Taylor Wimpey lifted by upgrades to 'buy' at Canaccord Genuity, while Standard Chartered was higher on the back of an upgrade to 'overweight' at JPMorgan.
Plumbing and heating products distributor Ferguson, formerly Wolseley, was in the black after saying said it was on track to meet annual profit expectations after strong growth in the US offset tough trading in the UK during the first quarter.
Telecommunications giant Vodafone ticked higher after saying it has entered into a strategic alliance with SoftBank Corp, focussing on mobile services for enterprise customers.
IG Group rallied after saying it saw growth slow in the second quarter after a barnstorming first, though revenues were still higher and costs lower than the same period last year.
Budget carrier Wizz Air flew higher as it reported 22% growth in passenger numbers for November and the said the load factor ticked up to 88.3% from 86.8%, while Wood Group nudged up as it won a multi-million dollar contract to support GlaxoSmithKline in Germany.
On the downside, Provident Financial was under the cosh after it said its Moneybarn motor finance arm is being investigated by the financial watchdog, the second of the embattled sub-prime lender's businesses to be probed.
Cineworld shares fell after it reached an agreement to buy US rival Regal Entertainment Group for $3.6bn (£2.7bn), creating the world's second largest cinema operator.
Victrex reversed earlier gains after its full-year numbers, despite the dividend coming in ahead of expectations.
FTSE 100 - Risers
Tesco (TSCO) 202.75p 3.89%
Sainsbury (J) (SBRY) 240.10p 3.09%
Standard Chartered (STAN) 748.50p 2.93%
Morrison (Wm) Supermarkets (MRW) 220.10p 2.85%
Old Mutual (OML) 198.80p 1.53%
Whitbread (WTB) 3,657.00p 1.27%
Hammerson (HMSO) 530.00p 1.24%
Rolls-Royce Holdings (RR.) 850.50p 1.19%
Fresnillo (FRES) 1,288.00p 1.18%
Persimmon (PSN) 2,595.00p 1.13%
FTSE 100 - Fallers
Worldpay Group (WPG) 410.00p -2.77%
Glencore (GLEN) 335.00p -1.98%
easyJet (EZJ) 1,402.33p -1.93%
Antofagasta (ANTO) 885.00p -1.61%
Shire Plc (SHP) 3,591.50p -1.51%
Anglo American (AAL) 1,365.00p -1.44%
Sage Group (SGE) 754.62p -1.42%
Barclays (BARC) 191.55p -1.39%
Rio Tinto (RIO) 3,492.50p -1.34%
Babcock International Group (BAB) 678.50p -1.24%
FTSE 250 - Risers
Euromoney Institutional Investor (ERM) 1,171.00p 3.81%
TBC Bank Group (TBCG) 1,659.00p 3.69%
Millennium & Copthorne Hotels (MLC) 579.00p 3.21%
Tullow Oil (TLW) 188.44p 2.80%
Spire Healthcare Group (SPI) 247.10p 2.32%
Capital & Counties Properties (CAPC) 266.50p 2.15%
LondonMetric Property (LMP) 179.30p 2.11%
Vectura Group (VEC) 99.45p 2.10%
CLS Holdings (CLI) 227.40p 1.93%
Booker Group (BOK) 223.40p 1.92%
FTSE 250 - Fallers
Provident Financial (PFG) 784.00p -10.91%
Ferrexpo (FXPO) 240.20p -4.57%
Sophos Group (SOPH) 531.50p -4.32%
Cineworld Group (CINE) 527.50p -3.39%
Vedanta Resources (VED) 657.40p -2.97%
Stagecoach Group (SGC) 177.50p -2.74%
IMI (IMI) 1,248.00p -2.42%
Mitie Group (MTO) 192.60p -2.38%
FDM Group (Holdings) (FDM) 903.50p -2.17%
Just Eat (JE.) 778.50p -2.14%