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London midday: Stocks fall further as pound rallies, traders book profits
London stocks had extended losses by midday on Thursday, dragged lower by a stronger pound and a bout of profit taking as investors sifted through a torrent of trading updates.
The FTSE 100 was down 0.4% to 7,695.13, while the pound rose 0.4% versus the dollar to 1.3880 but fell 0.1% against the euro to 1.1338. A firmer pound tends to dent the top-flight index as around 70% of its constituent derive most of their earnings from overseas.
IG analyst Chris Beauchamp said: "Yet more strength in the pound is not helping matters, but overall the index was looking overextended after a remarkable rally from the lows down at 7,300 at the beginning of December. Santa duly delivered his usual rally, and it enjoyed a good run into the first half of January, but with Brexit discussions now looming once more and a steady stream of updates from firms coming through the urge to book some profits has clearly got the better of many investors.
"Nonetheless, from a technical standpoint the breakout above the 7,600 highs of 2017 is a positive sign, and some weakness back in this direction should both take some heat out of the market and also allow others to buy in. At least it makes a change from the relentless grind higher in the US."
In corporate news, profit taking hit Royal Mail, which declined after a strong recent run and as it reported on a solid performance over the Christmas trading period, and Associated British Foods, which was weaker as it reported a 3% increase in revenues in recent weeks, as strong growth from its Primark clothing retail arm helped offset a big decline in sugar.
Halfords fell despite reporting a rise in third-quarter sales and record sales over Christmas and Black Friday.
GKN slipped as it called Melrose Industries out over its offer statement, saying it was "misleading", after the engineer rejected a sweetened but hostile bid of £7.4bn a day earlier.
Rightmove was hit by a downgrade to 'underweight' at JPMorgan, while Premier Oil was lower after a downgrade to 'hold' by Investec. Metro Bank was weaker as Berenberg initiated coverage of the stock at 'sell'.
Information services giant Experian turned lower even as it reported an 8% improvement in revenue for the three months to 31 December.
AA was under the cosh as Barclays retained its 'overweight' stance on the group but slashed the price target to 200p from 270p as it lowered its 2019 EBITDA forecasts.
SSE, Compass Group, Shaftesbury and Micro Focus were all in the red as their stock went ex-dividend.
On the upside, Whitbread was in the black as reports that its new activist investor was pushing for a break-up of the Costa Coffee and Premier Inn owner, which offset the company's warning that tough UK conditions were brewing, with sales up just 0.3% in the third quarter.
Mining giant BHP Billiton edged up after saying said it was looking at offloading its US shale oil business either a trade sale, demerger or public offering. In a quarterly update the company reported a 20% rise in copper production to 429,000 tonnes, iron ore output rose 3% to 62m tonnes, 6% per cent to 48m barrels.
Infrastructure group Balfour Beatty rallied after saying the recently-enacted US tax changes would lower its effective tax rate on US earnings to 26% from 40% in 2018 and beyond, boosting earnings.
Hargreaves Lansdown was the standout gainer as Barclays reiterated its 'overweight' stance on the stock and lifted the price target, while Britvic was boosted by an upgrade to 'buy' at Deutsche Bank.
On the data front, the Royal Institution of Chartered Surveyors' monthly house price index rose to +8 in December from 0 in November, which had been the worst reading since March 2013. Economists had been expecting the index to be unchanged.
But the survey found that last year's cut in stamp duty for first-time buyers has done nothing to boost demand, with the new buyer enquiries balance falling to -15 in December from -5 in November.
Market Movers
FTSE 100 (UKX) 7,695.13 -0.39%
FTSE 250 (MCX) 20,707.15 -0.30%
techMARK (TASX) 3,495.23 -0.78%
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 1,913.00p 3.97%
Evraz (EVR) 381.50p 2.25%
Whitbread (WTB) 3,931.00p 1.97%
Coca-Cola HBC AG (CDI) (CCH) 2,400.00p 1.69%
Johnson Matthey (JMAT) 3,248.00p 0.81%
Mondi (MNDI) 1,926.50p 0.78%
Paddy Power Betfair (PPB) 8,425.00p 0.78%
Glencore (GLEN) 410.05p 0.75%
International Consolidated Airlines Group SA (CDI) (IAG) 652.40p 0.68%
Rio Tinto (RIO) 4,029.50p 0.62%
FTSE 100 - Fallers
SSE (SSE) 1,301.00p -3.06%
Associated British Foods (ABF) 2,776.34p -2.82%
Mediclinic International (MDC) 604.20p -2.39%
Burberry Group (BRBY) 1,583.50p -2.19%
Shire Plc (SHP) 3,434.20p -1.88%
Compass Group (CPG) 1,500.00p -1.70%
Imperial Brands (IMB) 3,021.50p -1.66%
BT Group (BT.A) 264.55p -1.65%
Hammerson (HMSO) 501.20p -1.57%
Micro Focus International (MCRO) 2,142.20p -1.51%
FTSE 250 - Risers
NewRiver REIT (NRR) 318.00p 6.18%
Balfour Beatty (BBY) 298.80p 2.65%
Britvic (BVIC) 819.50p 2.44%
Pershing Square Holdings Ltd NPV (PSH) 1,049.80p 2.32%
CYBG (CYBG) 332.40p 2.21%
Cineworld Group (CINE) 541.00p 1.88%
IG Group Holdings (IGG) 770.00p 1.78%
IWG (IWG) 270.10p 1.54%
Hunting (HTG) 640.50p 1.43%
Spire Healthcare Group (SPI) 253.50p 1.40%
FTSE 250 - Fallers
AA (AA.) 152.76p -7.50%
JD Sports Fashion (JD.) 378.10p -4.08%
BTG (BTG) 722.50p -3.67%
Ibstock (IBST) 253.40p -3.58%
International Public Partnerships Ltd. (INPP) 151.80p -3.44%
Virgin Money Holdings (UK) (VM.) 275.80p -3.30%
Capital & Counties Properties (CAPC) 298.40p -3.09%
Kier Group (KIE) 1,067.89p -2.65%
Rightmove (RMV) 4,450.00p -2.43%
Coats Group (COA) 79.47p -2.37%