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London midday: Stocks flat as investors digest data; banks and retailers rally
London stocks had flattened out by midday on Wednesday, erasing earlier small gains as investors digested the latest reading on industrial production, with retailers in focus again following updates from Sainsbury's, Ted Baker and Superdry.
The FTSE 100 was flat at 7,733.49, easing back after hitting a record intraday high of 7,756.11 earlier, having closed at a fresh peak of 7,731.02 the day before.
Meanwhile, the pound was down 0.5% against the euro at 1.1285 as the single currency was helped by an increase in German bond yields in response to the Bank of Japan's decision to trim its stimulus package. Sterling was up 0.1% versus the greenback at 1.3556.
Data released on Wednesday morning showed that UK industrial production notched up its strongest run of growth in 23 years as output from the manufacturing sector rose more than expected.
Industrial production increased 0.4% in November compared to the previous month, which had been expected by economists, up from October's figure which was revised up to 0.2% from the flat month initially recorded. This was the eighth monthly rise in a row, a feat last achieved in 1994.
Year on year, this means IP was 2.5% higher in November, versus a 1.8% consensus forecast and down from a revised 4.3% a month before.
Manufacturing production was also up 0.4%, but was only expected to increase 0.3%, while October's figure was revised up to 0.3% from 0.1%. November's output was up 3.5% on the prior year, above the 2.8% consensus forecast, with October revised up to 4.7%.
UK construction output disappointed however, rising 0.4% when a 0.8% increase had been expected after the previous month was revised down to a decline of 1.1%. Furthermore, in the latest three months output was down 2.0% compared to the prior three months, the largest decline since 2012.
Pantheon Macroeconomics economist Samuel Tombs said: "On the face of it, industry is on track to bolster GDP growth again in Q4; the average level of production in October and November exceeded Q3's level by 0.9%. But the closure of the Forties oil pipeline in the North Sea - which carries about one-third of oil and gas output - for most of December suggests that total industrial production plunged by about 2.0% month-to-month in the final month of 2017.
"As such, we estimate that total production rose by just 0.3% quarter-on-quarter in Q4 and contributed a mere 0.05 percentage points to GDP growth, down from 0.19pp in Q3. Meanwhile, the recent rise in oil prices likely will undermine the industrial sector's recovery this year."
Corporate news was all about the retailers again, with Sainsbury's up as it said that following a solid Christmas trading period and a better-than-expected contribution from Argos, full year profits are now likely to beat the current consensus forecast.
Fashion retailer Ted Baker rallied as it hailed a "good" performance over the Christmas, with retail sales up 9%, and said full-year results should be in line with its expectations.
Trendy fashion outlet Superdry went the other way, however, after saying underlying half year pre-tax profits rose 20.5% to £25.3m as online sales helped to boost revenue along with forex tailwinds.
Meanwhile, banks lent support, with Asia-focused Standard Chartered and HSBC among the top gainers following a rise in Chinese inflation overnight. StanChart was also lifted by a broker upgrade, while all of the sector may have been boosted by the reaction in yields after Japan's surprise reduction in bond buying.
Marks & Spencer rose after appointing Humphrey Singer - currently group finance director at Dixons Carphone - to replace Helen Weir as chief finance officer.
Housebuilder Taylor Wimpey was in the red as it said 2017 results would be in line with forecasts, and that it expects to achieve further growth and performance improvement in 2018.
Paddy Power Betfair fell after it appointed Dan Taylor to the newly-create role of chief executive officer of Europe and Barni Evans as CEO of its Australian operations, Sportsbet, while Tullow Oil nudged a touch lower despite a positive trading statement.
Aerospace and defence engineer Senior advanced after saying a good performance in November and December and a benefit from US tax changes will see earnings come in higher than expected, while recruiter Pagegroup surged as it said it had a "record" year in 2017.
Centamin rose after a better-than-expected production update, Marshalls was in the black after reporting an 8% jump a jump in full-year revenue and expressing confidence in meeting its 2017 expectations.
OneSavings Bank was under the cosh after JC Flowers sold off a 10% stake in the company at 390p per share.
IG and CMC Markets were down after the Financial Conduct Authority raised concerns again about marketing of CFDs to retail investors.
In broker note action, Hikma Pharmaceuticals slumped after a downgrade to 'underperform' at Jefferies.
RBS was boosted by an upgrade to 'overweight' at Morgan Stanley, Standard Chartered was up after an upgrade to 'neutral at Redburn and Metro Bank rose after an upgrade to 'neutral' at Citi.
Market Movers
FTSE 100 (UKX) 7,733.49 0.03%
FTSE 250 (MCX) 20,782.76 -0.44%
techMARK (TASX) 3,512.62 -0.80%
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 288.80p 2.96%
Standard Chartered (STAN) 815.00p 2.80%
Micro Focus International (MCRO) 2,257.00p 2.54%
HSBC Holdings (HSBA) 784.90p 2.43%
3i Group (III) 937.40p 2.02%
Marks & Spencer Group (MKS) 323.60p 1.67%
Prudential (PRU) 1,936.50p 1.49%
Sainsbury (J) (SBRY) 252.10p 1.49%
Carnival (CCL) 4,983.00p 1.28%
Aviva (AV.) 522.60p 1.24%
FTSE 100 - Fallers
Taylor Wimpey (TW.) 199.45p -4.52%
Paddy Power Betfair (PPB) 8,535.00p -3.01%
Persimmon (PSN) 2,645.00p -2.58%
Mediclinic International (MDC) 621.20p -2.33%
Rolls-Royce Holdings (RR.) 848.47p -2.11%
Worldpay Group (WPG) 438.60p -1.90%
easyJet (EZJ) 1,479.50p -1.86%
Smith & Nephew (SN.) 1,255.00p -1.84%
Barratt Developments (BDEV) 632.12p -1.75%
Berkeley Group Holdings (The) (BKG) 4,169.00p -1.67%
FTSE 250 - Risers
Pagegroup (PAGE) 508.00p 7.90%
Ted Baker (TED) 3,048.80p 7.50%
Senior (SNR) 282.00p 5.15%
Centamin (DI) (CEY) 161.20p 4.57%
Metro Bank (MTRO) 3,686.00p 3.95%
Marshalls (MSLH) 463.40p 3.67%
BGEO Group (BGEO) 3,792.00p 3.38%
TI Fluid Systems (TIFS) 244.80p 2.68%
TBC Bank Group (TBCG) 1,654.00p 2.61%
Just Group (JUST) 158.74p 2.28%
FTSE 250 - Fallers
Hikma Pharmaceuticals (HIK) 1,010.00p -6.05%
Superdry (SDRY) 1,925.00p -5.64%
QinetiQ Group (QQ.) 215.17p -5.21%
Serco Group (SRP) 97.65p -4.36%
SSP Group (SSPG) 628.00p -3.98%
TalkTalk Telecom Group (TALK) 136.10p -3.82%
OneSavings Bank (OSB) 400.00p -3.61%
Meggitt (MGGT) 474.50p -3.60%
Go-Ahead Group (GOG) 1,545.70p -3.09%
UBM (UBM) 724.50p -3.08%