London close: Stocks fall back amid weak jobs data

Stocks in London ended the session moderately lower as markets digested a weaker reading on the UK labour market while bond investors continued to focus on comments from central bankers and political developments in Washington.

The FTSE 100 ended the day down by 0.63% or 43.02 points at 6,749.72. Meanwhile, oil prices retreated, with Brent crude 0.64% weaker at $46.64 per barrel on the ICE.

In parallel, the yield on the benchmark 10-year gilt was unchanged at 1.38% and off an intra-day high of 1.44%, while the pound was also off its weakest levels against the greenback, trading just 0.01% lower at 1.2458.

Acting as a backdrop, the latest slate of Fed speakers offered disparate views on the likelihood of a December interest rate hike by the US central bank.

Speaking from London, St.Louis Fed president James Bullard said only a "surprise" might keep the Fed from tightening, while his opposite number at the Minneapolis Fed said he wanted to see progress on core inflation, inflation expectations and the unemployment rate before he would throw his hat in the ring and back a move.

Britain's labour market cooled more than expected in September and October, although economists did not appear especially put off by the data.

Employment growth in the UK slowed sharply over the three months to September, rising by 49,000 versus August´s increase of 106,000 (consensus: 91,000).

The rate of unemployment on the other hand dipped from 4.9% to 4.8% (consensus: 4.9%), its lowest level since mid-2005, as the number of people out of work was cut by 52,000, the largest month-on-month since April 2014.

However, the claimant count jumped by 9,800 (consensus: 500) and average weekly earnings were ahead by only 2.3% year-on-year in the quarter ending in September (consensus: 2.5%).

"The UK labour market continued to show resilience in September [...] Indeed, it is too early to see an impact from the leave vote at the EU referendum on the UK labour market, in our view.

"We expect the referendum outcome to push up unemployment only gradually, likely at the turn of the year, and subsequently prevent upward wage growth pressures from building, thus forcing households to be more prudent and reduce private consumption by end-2017," was the view from Barclays Research.

Regarding the news-flow from Capitol Hill, Jasper Lawler at CMC Markets said: "There has been a lot of hoo-hah over Donald Trump’s cabinet appointments as well as a staff reshuffle. Concern that a disorganised transition of power bodes badly once Trump is in the White House is understandable, though probably a little premature at this early stage."

Reports on Wednesday morning referenced "infighting" among Donald Trump's transition team surrounding his foreign policy appointments, with Eliot Cohen, a leader of the anti-Trump Republicans, coming out against the President-elect.

However, earlier in the week Trump had received the endorsement of one of the Republican party's oldest hands, Brent Scowcroft, one of George H.W. Bush's national security advisers in the early 90s.

In corporate news, housebuilder Barratt Developments slumped lower after saying in a trading update that sales in July had risen by 4.3% but cautioning that the housing market was becoming more challenging.

Peer British Land also ended lower as it posted higher profits for the first half of the year but said it expects to proceed more cautiously in property development as it noted a change in the behaviour of property markets since the Brexit vote.

ICAP plummeted after it reported a drop in first-half trading profit. Analysts at Numis described the inter-dealer broker's interim results as "mixed" and the firm's lower-than-expected guidance for its 2018 dividend towards 7.0 to 8.0p (Numis: 16.0p). "Following the shares strong recent performance, we move our recommendation to HOLD from BUY," the broker said.

On the upside, insurer Prudential drifted lower despite reporting a 19% jump in new business profit in the first nine months of the year and saying it plans to boost its dividend by 5% a year.

Rolls-Royce fell even after saying its outlook for 2016 remained unchanged for revenue, profit and cash. The aerospace and defence company said it would benefit from weaker sterling and life cycle cost reductions which would more than offset higher engineering and programme costs in its civil aerospace unit.

Temporary power provider Aggreko advanced as it said it expects full-year 2016 results to be broadly in line with current market expectations, with pre-exceptional profit before tax of around £225m.

Severn Trent ticked up after it agreed to buy water service provider Dee Valley Group for about £78.5m.

Shares in Morrisons slipped as analysts at HSBC said that while Sainsbury and Morrisons face the double whammy of rising costs and weak sales, with cost savings programmes offering only a temporary salve, Tesco was winning market share and with growing momentum was on a virtuous circle.

Morrisons also said it was launching a store pick service with Amazon for its online customers.

Cranswick was in the black as the FTSE 250 food producer announced the acquisition of Northern Irish pork processing business Dunbia Ballymena for an undisclosed sum.

Great Portland Estates was on the backfoot after completing the sale of 73/89 Oxford Street and 1 Dean Street in London to Norwegian sovereign wealth fund Norges Bank Real Estate Management for £276.5m.

Anglo American was stronger after Goldman Sachs upped to the stock to ‘buy’ from ‘sell’, while Electrocomponents surged after HSBC raised its rating on the stock to ‘buy’.

Market Movers

FTSE 100 (UKX) 6,749.72 -0.63%
FTSE 250 (MCX) 17,473.97 -0.56%
techMARK (TASX) 3,300.72 -0.27%

FTSE 100 - Risers

Relx plc (REL) 1,332.00p 2.94%
Severn Trent (SVT) 2,186.00p 2.20%
WPP (WPP) 1,677.00p 1.83%
3i Group (III) 630.00p 1.37%
ITV (ITV) 167.00p 1.21%
Johnson Matthey (JMAT) 3,335.00p 1.18%
Sage Group (SGE) 660.00p 0.99%
TUI AG Reg Shs (DI) (TUI) 1,030.00p 0.78%
Polymetal International (POLY) 791.00p 0.76%
Diageo (DGE) 2,002.50p 0.75%

FTSE 100 - Fallers

CRH (CRH) 2,701.00p -2.88%
Barratt Developments (BDEV) 469.70p -2.77%
easyJet (EZJ) 1,060.00p -2.48%
Wolseley (WOS) 4,499.00p -2.47%
British Land Company (BLND) 592.50p -2.31%
Centrica (CNA) 199.80p -2.30%
Standard Life (SL.) 347.40p -2.14%
Burberry Group (BRBY) 1,383.00p -2.12%
Rolls-Royce Holdings (RR.) 740.00p -2.12%
Travis Perkins (TPK) 1,388.00p -2.12%

FTSE 250 - Risers

Paysafe Group (PAYS) 411.00p 5.60%
Vedanta Resources (VED) 801.50p 5.46%
B&M European Value Retail S.A. (DI) (BME) 255.50p 4.49%
Polypipe Group (PLP) 300.60p 4.38%
NMC Health (NMC) 1,369.00p 2.71%
Ibstock (IBST) 180.10p 2.16%
Riverstone Energy Limited (RSE) 1,279.00p 2.16%
Kaz Minerals (KAZ) 339.50p 2.07%
Petra Diamonds Ltd.(DI) (PDL) 151.40p 1.95%
Electrocomponents (ECM) 371.60p 1.81%

FTSE 250 - Fallers

ICAP (IAP) 476.20p -10.57%
Ocado Group (OCDO) 258.20p -8.50%
Euromoney Institutional Investor (ERM) 1,031.00p -5.65%
Aggreko (AGK) 765.00p -4.61%
Allied Minds (ALM) 350.00p -3.59%
AO World (AO.) 157.70p -3.25%
Hochschild Mining (HOC) 228.70p -3.13%
Tullett Prebon (TLPR) 410.70p -3.09%
Mitie Group (MTO) 211.70p -3.02%
Balfour Beatty (BBY) 284.70p -3.00%