London close: Jump in sterling dents Footsie

London stocks dipped on Friday, despite strong gains for miners, as ongoing strength in sterling and worries about trade relations between the US and China capped gains.

The FTSE 100 was 0.14% lower at 6,809.22 as the pound jumped by 0.83% against the US dollar to 1.3174 although it slipped 0.11% versus the euro to 1.1544, after having surged overnight following a report that Northern Ireland's Democratic Unionist Party has privately given support to Theresa May's Brexit 'Plan B' agreement provided it contains a clear time-frame for the Irish backstop.

"While that is wonderfully pragmatic of them, the EU have consistently said that they were not prepared to put an end date on the backstop, so it's not immediately apparent we are any further forward, however markets still appear to be pricing in the prospect that something will be agreed to avoid a 'no deal' Brexit," said CMC Markets analyst Michael Hewson.

Meanwhile, Sino-US relations remained in focus as investors digested conflicting signals.

Also overnight, US Commerce Secretary Wilbur Ross warned that the US and China were "miles and miles" away from ending their trade dispute. However, he also said that there was a fair chance that China will get a trade deal. Meanwhile, Trump's economic advisor Larry Kudlow said the US president is optimistic on trade talks.

Closer to home, UK retail sales data have been flat in January, data from the Confederation of British Industry showed, though growth was expected for the month ahead.

The balance of retailers reporting year-on-year growth in sales volumes came in at zero, stabilising from -13 in December, but a touch below expectations for a balance of +2. Sales volumes remained well below average, to the greatest extent since November 2011, while orders placed with suppliers rose only slightly.

The outlook for the coming month was brighter, however, with 43% of respondents expecting sales volumes to increase in February and 19% expecting a drop, giving a balance of +24.

The survey revealed a big increase in the ratio of stocks to expected sales, with the balance the highest since February 2008. This was likely down to a mix of weaker-than-expected demand and stockpiling to prepare for a possible no-deal Brexit.

CBI head of economic intelligence Anna Leach said: "The High Street has had another challenging month, with retail sales volumes flat and well below average for the time year. Pressures on the retail sector remain high, with consumer spending expected to remain fairly subdued and competition fierce."

Meanwhile, data from UK Finance showed mortgage approval numbers declined for the second months in a row in December, while credit card lending growth continued to cool.

Mortgage approvals for house purchases in December fell 1% to a three-month low of 38,779 from 39,205 in November and after October's three-month high.

The number of mortgages approved by the main high street banks in December was also down 2.4% compared to a year before, with home purchase approvals up 5.3% but remortgages down 5.8%.

Gross mortgage lending rose 5% year-on-year to £21.1bn, with the entire year seeing a 3.8% increase over 2017. Net mortgage lending, however, slowed to £1.24bn in December, the weakest level since August 2016.

Miners were the standout gainers, with Glencore, BHP, Antofagasta and Anglo American all higher as copper prices rose. Precious metals miner Fresnillo shone after an upgrade to 'buy' from 'neutral' at UBS.

Vodafone was in the red despite saying it managed to keep underlying growth positive in the third quarter as it stemmed some of the customer losses in Italy and Spain.

Total service revenues were down 0.8%, worse than analyst expectations for a decline of 0.7%, mostly due to a misfiring price promotion at South Africa's Vodacom that had been revealed a day earlier.

The shares are trading close to a 10-year low amid concerns over the dividend. CMC's Hewson noted the size of its dividend, currently yielding around 9%, was not fully covered by profits. This means that the company is having to fund the payout by way of borrowing, he said. "A dividend cover of less than 1 means that profits aren’t sufficient to cover the payout to shareholders, something that isn’t sustainable over time."

Pharmaceutical company Indivior fell even as it won a temporary restraining order to prevent US rival Alvogen Pine Brook from launching its generic buprenorphine and naloxone sublingual film product.

Rentokil Initial was also weaker after the Competition and Markets Authority said it will need to sell several large supply contracts to satisfy the regulator's concerns about its merger with Cannon Hygiene.

Irn-Bru maker AG Barr fizzed lower despite saying it expects a 5% increase in full-year revenue, as it highlighted ongoing political and economic uncertainty in the UK.

Property stocks took a hit as Citi cut British Land, Derwent London, Great Portland Estates, Hammerson, Intu and Land Securities to 'sell', and Shaftesbury to 'neutral'.

Market Movers

FTSE 100 (UKX) 6,809.22 -0.14%
FTSE 250 (MCX) 18,643.58 0.09%
techMARK (TASX) 3,327.50 -0.68%

FTSE 100 - Risers

Fresnillo (FRES) 946.80p 6.14%
Anglo American (AAL) 1,865.00p 4.05%
Smurfit Kappa Group (SKG) 2,180.00p 3.89%
Antofagasta (ANTO) 827.20p 3.69%
Glencore (GLEN) 297.50p 3.24%
easyJet (EZJ) 1,292.50p 3.03%
Rio Tinto (RIO) 3,878.00p 3.00%
BHP Group (BHP) 1,609.40p 2.57%
Morrison (Wm) Supermarkets (MRW) 235.35p 2.33%
Wood Group (John) (WG.) 534.20p 2.22%

FTSE 100 - Fallers

Vodafone Group (VOD) 137.00p -4.89%
InterContinental Hotels Group (IHG) 4,257.50p -2.87%
GVC Holdings (GVC) 652.50p -2.83%
Hiscox Limited (DI) (HSX) 1,499.50p -2.58%
Severn Trent (SVT) 1,925.00p -2.58%
United Utilities Group (UU.) 800.80p -2.56%
Burberry Group (BRBY) 1,785.50p -2.03%
AstraZeneca (AZN) 5,371.00p -1.99%
Coca-Cola HBC AG (CDI) (CCH) 2,489.00p -1.78%
Admiral Group (ADM) 2,090.00p -1.65%

FTSE 250 - Risers

Kaz Minerals (KAZ) 556.60p 8.71%
Just Eat (JE.) 713.00p 6.86%
Hochschild Mining (HOC) 172.70p 5.72%
Intu Properties (INTU) 112.00p 4.87%
Weir Group (WEIR) 1,474.00p 4.28%
Renishaw (RSW) 4,258.00p 4.01%
Sirius Minerals (SXX) 19.87p 3.81%
NewRiver REIT (NRR) 214.00p 3.38%
RHI Magnesita N.V. (DI) (RHIM) 4,196.00p 3.25%
Clarkson (CKN) 2,545.00p 3.25%

FTSE 250 - Fallers

Barr (A.G.) (BAG) 762.00p -4.51%
Vivo Energy (VVO) 124.58p -4.17%
Restaurant Group (RTN) 144.00p -3.23%
SSP Group (SSPG) 662.00p -3.17%
Tritax Big Box Reit (BBOX) 135.30p -3.01%
Metro Bank (MTRO) 1,441.00p -2.70%
Plus500 Ltd (DI) (PLUS) 1,520.00p -2.69%
Lancashire Holdings Limited (LRE) 573.50p -2.63%
Beazley (BEZ) 507.00p -2.59%
McCarthy & Stone (MCS) 137.50p -2.55%