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London midday: Stocks up but off highs as Q1 GDP confirmed at five-year low
London stocks were up but off earlier highs by midday on Friday following confirmation that the UK economy barely grew in the first quarter, with the overall mood generally a bit brighter on the back of North Korea's conciliatory response to US President Trump's cancellation of their summit.
The FTSE 100 was up 0.2% to 7,734.01, while the pound was down 0.3% against the dollar at 1.3342 and 0.2% lower versus the euro at 1.1398, held back by the GDP data and reports of a breakdown in Brexit talks as the European Union accused Britain of chasing a fantasy when it comes to some of its demands.
Proposals to avoid a hard border with Ireland and to continue participating in the EU's easy criminal extradition system and in the high-security parts of the Galileo satellite programme were deemed unacceptable to other member states.
Meanwhile, data from the Office for National Statistics confirmed that UK economic growth slowed to 0.1% in the first quarter, marking a five-year low.
In its second estimate of GDP, the ONS confirmed that construction output declined sharply the quarter, while growth in services and manufacturing also slowed. Growth in household consumption remained subdued, business investment fell but wages grew strongly reflecting record-high employment levels.
Household spending grew by just 0.2%, which was the weakest since the end of 2014, while business investment decreased by 0.2% quarter-on-quarter and net trade provided just 0.1% to support growth.
"Overall, the economy performed poorly in the first quarter with manufacturing growth slowing and weak consumer-facing services," said Rob Kent-Smith, head of GDP at ONS. "Oil and gas bounced back strongly, however, following the shutdown of the Forties pipeline at the end of last year.
"While there was some evidence of the poor weather hitting construction and high street shopping, this was offset to an extent by increased energy supply and online sales."
Any hopes that quarterly growth of 0.1% might be quickly revised up have been disappointed, said economist Ruth Gregory at Capital Economics.
Investors were also digesting the latest data from UK Finance, which showed that the value and number of UK mortgages improved more than expected in April, confirming a stabilising of housig demand.
UK Finance also revealed that credit card spending was 9.8% higher than a year earlier, with outstanding levels of credit card borrowing falling to 5.2% over the year from 5.7% in March.
More generally, the tone was upbeat as North Korea extended an olive branch to the US after Trump said on Thursday that he had cancelled his meeting with North Korean leader Kim Jong Un in Singapore next month, blaming "open hostility".
However, North Korea's measured response assuaged investors following a wobble in the previous session, as an official for the country said it is still willing to meet with the US to "resolve issues any time and in any format".
In corporate news, Pennon racked up strong gains as it reported a rise in full-year pre-tax profit and hiked its dividend as it sounded a positive note on the outlook for water and waste.
SSE also gained, reversing earlier losses as it lifted its full-year dividend by 3.7% to 94.7p but posted a 6% drop in full-year pretax profit and cut its medium-term dividend outlook.
B&Q and Screwfix owner Kingfisher and Wickes owner Travis Perkins were both in the black as investors bet that they would benefit from disruption at Homebase after Australia's Wesfarmers sold the business for £1.
AstraZeneca was on the front foot after saying that phase III trials of its Imfinzi lung cancer treatment showed positive overall survival results in lung cancer patients whose disease had not progressed following chemotherapy and radiation.
Spectris traded higher as it posted a jump in group like-for-like sales for the first quarter and said its performance remains consistent with its expectations for the full year.
GVC Holdings rallied after saying it now expects cost synergies from its acquisition of Ladbrokes Coral to be £130m by 2021 versus the £100m expected at the time of the deal.
Gold miner Centamin tumbled as it cut its production guidance for 2018 due to "persisting low grades" at its flagship Sukari mine in Egypt.
In broker note action, Royal Mail was knocked lower by a downgrade to 'sell' by Berenberg, while Moneysupermarket was hit by a downgrade to 'add' at Peel Hunt.
Big Yellow Group was cut to 'neutral' at JPMorgan and Imperial Brands was cut to 'sector perform' by RBC Capital Markets.
Market Movers
FTSE 100 (UKX) 7,734.01 0.22%
FTSE 250 (MCX) 21,112.64 0.59%
techMARK (TASX) 3,549.49 0.54%
FTSE 100 - Risers
Mediclinic International (MDC) 645.40p 4.84%
Kingfisher (KGF) 310.00p 4.41%
Smurfit Kappa Group (SKG) 3,084.00p 2.80%
BT Group (BT.A) 208.15p 2.46%
NMC Health (NMC) 3,836.00p 2.13%
G4S (GFS) 279.10p 2.05%
Severn Trent (SVT) 2,073.00p 1.97%
United Utilities Group (UU.) 809.00p 1.86%
Whitbread (WTB) 4,204.00p 1.77%
Micro Focus International (MCRO) 1,347.00p 1.55%
FTSE 100 - Fallers
Royal Mail (RMG) 531.60p -2.53%
Johnson Matthey (JMAT) 3,419.00p -1.47%
Anglo American (AAL) 1,783.20p -0.99%
Royal Dutch Shell 'B' (RDSB) 2,651.50p -0.95%
Melrose Industries (MRO) 239.70p -0.95%
BAE Systems (BA.) 640.20p -0.84%
BP (BP.) 562.20p -0.76%
BHP Billiton (BLT) 1,701.40p -0.74%
Royal Dutch Shell 'A' (RDSA) 2,579.00p -0.73%
Vodafone Group (VOD) 193.98p -0.45%
FTSE 250 - Risers
Entertainment One Limited (ETO) 297.20p 5.77%
Pennon Group (PNN) 765.00p 4.79%
GVC Holdings (GVC) 1,019.87p 3.75%
On The Beach Group (OTB) 484.50p 3.53%
Wizz Air Holdings (WIZZ) 3,334.00p 3.25%
Great Portland Estates (GPOR) 692.00p 3.11%
Bakkavor Group (BAKK) 200.00p 3.09%
Dunelm Group (DNLM) 632.91p 3.08%
Dixons Carphone (DC.) 233.40p 2.68%
Cranswick (CWK) 3,383.41p 2.65%
FTSE 250 - Fallers
Centamin (DI) (CEY) 135.41p -15.02%
Cairn Energy (CNE) 227.00p -4.30%
Big Yellow Group (BYG) 929.00p -2.93%
Electrocomponents (ECM) 708.80p -2.90%
TalkTalk Telecom Group (TALK) 118.30p -2.23%
Thomas Cook Group (TCG) 118.50p -2.07%
Sirius Minerals (SXX) 33.43p -2.02%
Pets at Home Group (PETS) 127.70p -1.69%
Tullow Oil (TLW) 240.50p -1.60%
Vietnam Enterprise Investments (DI) (VEIL) 455.00p -1.52%