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London close: FTSE extends record highs as pound gives up gains
London stocks set a new closing record within a stone's throw of the 8,000 mark as Bank of England policymaker waxed hawkish and a raft of corporate news also kept things interesting.
The FTSE 100 was climbed 18.28 points or 0.23% to 7,877.45, but failed to hold onto a late intraday high above 7,900 despite the pound giving up its earlier gains against the dollar. Sterling ended flat against the greenback at 1.3432 and gained 0.1% on the euro to 1.1400.
Chris Beauchamp, chief market analyst at IG, said: "Record highs on the FTSE 100 are becoming a daily occurrence it seems, as the index edges on further towards the 8,000 mark. At the rate it's going, we should hit this round number by Thursday, if not earlier. Little has disturbed this trend over the past two months, proving that even this long-established bull market can deliver remarkable surprises. What makes it more fascinating is of course that it comes despite political ennui, Brexit turmoil and a deteriorating consumer backdrop."
Sterling got an early lift after BoE monetary policy committee member Gertjan Vlieghe said in written evidence to the Treasury Select Committee that his own central projection required "one or two quarter point rate increases per year over the three-year forecast period". He said his expectations were stronger than the path of rates derived from market yields at the BoE's May inflation report, which suggested there would be just under three quarter-point increases in the next three years.
Adding to the hawkish mood, Bank of England governor Mark Carney told the Treasury committee he expected the economy to regain momentum after severe winter weather growth to almost grind to a half in the first quarter.
"There is a lot of residual softness in that first quarter which is why, for me, it makes sense to see if momentum is re-established which I do expect it to be," Carney said. But he added that the output lost in the first quarter was unlikely to be made up.
Carney's expectation of a rebound in UK economic growth, leaves open the possibility of an August rate hikes after soft first-quarter data led him to hold back in May.
Elsewhere, figures from the Office for National Statistics showed that public sector net borrowing excluding banks fell to its lowest level in a decade in April. Borrowing was down £1.6bn year-on-year to £7.8bn versus expectations of £8.6bn.
The latest survey from the Confederation of British Industry was also in focus, showing that factory orders weakened in May and output growth slowed to its weakest for more than two years. The volume of factory orders slowed to its lowest since November 2016 and output was broadly flat - the weakest showing since April 2016, the CBI's monthly manufacturing survey showed. Output rose in only eight of 17 sub-sectors with contraction sharpest in chemicals, food, drink and tobacco.
On the corporate front, a host of the FTSE 100's overseas-focused giants were lifted by the continuing weakness of the pound, while precious metals miner Fresnillo led the blue chips in the black as gold prices rose.
Balfour Beatty edged up as it said in an update ahead of its annual general meeting later in the week that trading was in line with its full year expectations and that it continues to make "good progress" on the second phase of transformation programme, while Galliford Try erased early losses when the construction group said it was likely to face additional costs due to weather-related delays in the building of Aberdeen's new ring road this year.
Entertainment One was tickled higher after the TV group said revenues for the family division rose more than 50% to £139m driven by children's favourites 'Peppa Pig' and 'PJ Masks'.
Rank Group shareholder shouted 'casa!' up strong gains after announcing the acquisition of QSB, the owner of Spanish digital bingo business YoBingo.es, for up to 52m in cash, while Intermediate Capital rallied after its final results.
Irish food company Greencore advanced as it posted an interim operating loss amid challenges in its US division, but said pre-tax profit and revenue rose, while meat packer Cranswick piled on the pounds as it reported a beefy 22% jump in full-year pre-tax profit as revenue grew.
West End property developer Shaftesbury edged higher after posting a 21% increase in first-half profit, while merchant bank Close Bros nudged up after saying it performed well in the third quarter.
Headlines were grabbed by Marks & Spencer as it confirmed the closure of 100 stores by 2022, 21 of which have already been closed. Some analysts suggested the dividend could be curtailed as part of management's turnaround plans.
But fellow high street retailer Halfords skidded even lower after the bike and car parts retailer said profits were likely to remain flat this year as selling prices remain flat, while Pets at Home outdid them both, falling 13% after reporting full-year profit down 12%.
Shares in Inmarsat tumbled but bailed out some losses after losing exclusivity on maritime safety after the UN certified US rival Iridium Communications to provide global maritime distress safety system (GMDSS) services.
National Grid was only slightly weaker after regulator Ofgem said it was launching an investigation into its UK transmission business, while UDG Healthcare also retreated on the back of a big drop in first-half profit.
Financial technology company NEX Group edged down despite reporting a 9% increase in full-year trading profit, while HomeServe declined even as it posted a 25% rise in full-year statutory pre-tax profit.
In broker note action, Next was lifted to 'reduce' at AlphaValue, while Ashmore was upgraded to 'hold' at HSBC. Royal Mail was cut to 'neutral' at JPMorgan and Hunting was downgraded to 'hold' at Kepler Cheuvreux. Glencore was trading higher as JPMorgan Cazenove added the stock to its European 'best equity ideas' list.
Market Movers
FTSE 100 (UKX) 7,877.45 0.23%
FTSE 250 (MCX) 21,191.44 0.25%
techMARK (TASX) 3,549.48 0.44%
FTSE 100 - Risers
Fresnillo (FRES) 1,315.50p 3.58%
Mediclinic International (MDC) 686.00p 3.31%
Micro Focus International (MCRO) 1,386.00p 3.28%
Melrose Industries (MRO) 247.00p 2.11%
Mondi (MNDI) 2,125.00p 2.02%
Vodafone Group (VOD) 199.14p 1.98%
Standard Chartered (STAN) 766.90p 1.71%
BT Group (BT.A) 206.45p 1.62%
Evraz (EVR) 490.90p 1.49%
Rentokil Initial (RTO) 338.20p 1.44%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 291.80p -2.86%
TUI AG Reg Shs (DI) (TUI) 1,768.00p -2.35%
Paddy Power Betfair (PPB) 8,665.00p -1.42%
BAE Systems (BA.) 646.20p -1.16%
Tesco (TSCO) 247.50p -1.16%
Next (NXT) 5,826.00p -0.82%
Informa (INF) 773.00p -0.80%
Prudential (PRU) 1,939.00p -0.79%
Scottish Mortgage Inv Trust (SMT) 508.00p -0.78%
BP (BP.) 588.40p -0.74%
FTSE 250 - Risers
Rank Group (RNK) 169.80p 9.55%
NewRiver REIT (NRR) 284.50p 6.55%
Greene King (GNK) 591.40p 6.06%
Greencore Group (GNC) 164.60p 5.08%
Ultra Electronics Holdings (ULE) 1,585.00p 4.76%
Clarkson (CKN) 2,595.00p 3.80%
Provident Financial (PFG) 679.20p 3.66%
Intermediate Capital Group (ICP) 1,203.00p 3.35%
TI Fluid Systems (TIFS) 254.00p 3.25%
Ocado Group (OCDO) 901.60p 3.23%
FTSE 250 - Fallers
Pets at Home Group (PETS) 137.40p -13.04%
Halfords Group (HFD) 342.40p -11.75%
Inmarsat (ISAT) 361.10p -7.08%
UDG Healthcare Public Limited Company (UDG) 878.50p -5.69%
Capita (CPI) 130.60p -4.64%
Thomas Cook Group (TCG) 119.70p -4.32%
Millennium & Copthorne Hotels (MLC) 549.00p -3.68%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 330.00p -3.23%
Hikma Pharmaceuticals (HIK) 1,364.50p -2.50%
Hunting (HTG) 895.00p -2.08%