London midday: FTSE flat as pummelled pound balances media mauling

London shares clawed their way back to the flat by midday on Friday as the pound tripped over disappointing industrial data and with caution staying traders' hands ahead of the US jobs report.

Following a 0.3% dip towards two-month lows in early trade, the FTSE 100 had crept five points into positive territory by noon at just over 7,342. The more domestically focused FTSE 250 remained in negative territory.

The pound was down more than 0.5% against the dollar to 1.2898 and by almost as much versus the euro to 0.8854.

Early losses had followed a sluggish session on Wall Street as geopolitics weighed and ahead of some major data releases as the week draws to an end.

Overnight the S&P 500 endured its biggest drop since mid-May and spilled into a red session for much of Asia, before the UK's Office for National Statistics released disappointing industrial output figures.

UK industrial production unexpectedly declined 0.1% in May when a 0.4% rise had been expected after the previous month's 0.2% fall, which suggests there will be a further drag on national economic growth for the second quarter of the year.

A 0.2% decline in manufacturing production was the cause, dropping for the second month in a row and coming as the fourth monthly decline in the so far in 2017, and falling short of the market consensus for a 0.5% increase.

While the gloomy reading was bad news for the pound, this was good news for the many FTSE 100 stocks that earn most of their profits overseas.

Mike van Dulken, head of research at Accendo Markets, told clients equities were also flattish into the weekend as investors were treading cautiously before the US jobs report.

"A decent beat could fuel expectations of additional Fed rate hikes and an imminent trimming of its balance sheet. This as markets digest a more hawkish ECB and BoE, coming to terms with a looming dial-back in globally accommodative central bank policy," he said.

Sentiment was further being hampered by oil prices falling around 6% off their recent highs as rising US production overpowers OPEC-led cuts to rekindle global supply glut fears, van Dulken said.

Later on Friday afternoon the big US jobs report and unemployment reading are due at 1330 BST. Analysts expected US non-farm payrolls to show a rise of 177,000 people while the unemployment rate was seen steady at 4.3%.

Jim Reid at Deutsche Bank said it was also worth keeping an eye on the US Fed’s July 2017 monetary policy report due to be delivered to Congress.

"This will form the basis for Yellen’s testimony in front of Congress and the Senate next week which is almost always a closely watched event."

Reid said the other potentially significant event for markets is the G-20 leaders gathering in Hamburg. "The gathering kicks off today and continues into the weekend with Merkel, Trump and Putin amongst the leaders attending. So we’ll see if there are any interesting headlines to emerge from that."

COMPANY NEWS

Media players were among the main fallers following a negative note from JP Morgan on the European ad market the day before, alongside a late downgrade on WPP from Exane BNP to 'underperform' due to broadcasters cutting ad guidance. This is weighing on the whole media sector in Europe, seeing ITV and Informa also in the red.

Top of the leaderboard was Centrica, whose shares were cooking on gas sparked by whispers of a takeover. The British Gas owner has been flagged as a potential target, attracting the attention of a couple of different bidding parties, according to the Wallstreetwires website. SSE was also lifted.

Easyjet was flying higher after being upgraded by Credit Suisse to 'outperform' from 'neutral', while similarly Severn Trent was lifted as HSBC upped it to 'hold' from 'reduce' and bumped the target price up to 2,200p from 2,160p.

Elsewhere among company updates, Howden Joinery shares were down slightly after it chief executive Matthew Ingle announced his retirement after 22 years after founding the company. The good news is that it has poached Screwfix boss Andrew Livingston from larger rival Kingfisher to fill the hole. Kingfisher was down 1.2%.

Homewares retailer Dunelm shot up 4% as it revealed total revenue for the fourth quarter rose 17.7% to £240.0m. The FTSE 250 firm said total revenue, excluding Worldstores, rose by 6.7% to £217.4m, with total like-for-like growth - combining LFL stores and home delivery - grew by 3.8%.

Aveva was up 1.7% after the software group said its full year outlook remains in line with management expectations after it made a "solid start" to the financial year.

Defence, security, transport and energy company Ultra Electronics was down 0.4% after announcing a conditional merger agreement to acquire New York-listed electromechanical device maker Sparton for $234.8m (£180.6m).

Market Movers

FTSE 100 (UKX) 7,340.37 0.04%
FTSE 250 (MCX) 19,323.90 -0.23%
techMARK (TASX) 3,490.16 0.19%

FTSE 100 - Risers

Centrica (CNA) 210.70p 4.36%
easyJet (EZJ) 1,400.00p 3.93%
Unilever (ULVR) 4,197.00p 1.68%
SSE (SSE) 1,477.00p 1.65%
Severn Trent (SVT) 2,199.00p 1.52%
Reckitt Benckiser Group (RB.) 7,693.00p 1.45%
United Utilities Group (UU.) 872.00p 1.40%
International Consolidated Airlines Group SA (CDI) (IAG) 623.50p 1.30%
Rolls-Royce Holdings (RR.) 925.00p 1.04%
Imperial Brands (IMB) 3,458.00p 1.02%

FTSE 100 - Fallers

Royal Mail (RMG) 408.90p -3.67%
WPP (WPP) 1,555.00p -3.42%
ITV (ITV) 177.70p -2.31%
Informa (INF) 653.50p -2.02%
Old Mutual (OML) 188.90p -1.41%
Sainsbury (J) (SBRY) 245.00p -1.29%
Sage Group (SGE) 662.50p -1.27%
Mediclinic International (MDC) 729.50p -1.22%
Johnson Matthey (JMAT) 2,783.00p -1.17%
Anglo American (AAL) 1,044.00p -1.14%

FTSE 250 - Risers

Dunelm Group (DNLM) 631.50p 5.78%
ZPG Plc (ZPG) 365.90p 3.01%
Computacenter (CCC) 863.00p 2.98%
Entertainment One Limited (ETO) 227.20p 2.76%
CLS Holdings (CLI) 211.90p 2.37%
Spire Healthcare Group (SPI) 334.30p 2.17%
Pennon Group (PNN) 806.50p 1.90%
Sanne Group (SNN) 661.50p 1.69%
Assura (AGR) 64.00p 1.35%
esure Group (ESUR) 300.00p 1.32%

FTSE 250 - Fallers

Nostrum Oil & Gas (NOG) 444.40p -7.03%
Petrofac Ltd. (PFC) 439.50p -3.81%
Aggreko (AGK) 879.00p -3.19%
Hochschild Mining (HOC) 254.40p -2.64%
Evraz (EVR) 218.10p -2.42%
Hunting (HTG) 487.30p -2.03%
Sirius Minerals (SXX) 29.45p -1.83%
BGEO Group (BGEO) 3,653.00p -1.83%
Vedanta Resources (VED) 699.50p -1.82%
Ocado Group (OCDO) 279.90p -1.82%