London midday: FTSE off highs as pound pops on services data

Equity markets in London were off highs by midday on Wednesday as the pound popped higher after data showed UK services industry output in March was stronger than expected.

The FTSE 100 was up 0.1% to 7,330.69, while the pound was 0.3% firmer against the dollar at 1.2478, having risen to 1.2488 after the services figures were released.

Much of the blue chip index's early gains were erased as the pound soared, IG analyst Joshua Mahony said.

"With today’s UK PMI reading having passed, we now have moved into a period where the US becomes centre of attention once more, with today’s ADP payrolls figure, closely followed by the latest FOMC minutes.

"While markets do not know exactly how to perceive the future policies of Donald Trump, when it comes to the Fed, the pathway is clear, with further rate hikes looking nailed on."

The UK services sector sector bounced back strongly from a five-month low on the back of the strongest price inflation since September 2008, though rising prices make a future slowdown more likely.

The seasonally adjusted Markit/CIPS services purchasing managers' index picked up to 55.0 in March from 53.3 in February, ahead of the consensus forecast for only a slight rise to 53.5.

Coming in the wake of the disappointing manufacturing and construction PMI numbers earlier this week, the strong services data meant UK gross domestic product growth is likely slow only slightly in the first quarter of the year.

Miners and oil stocks were the standout gainers on the FTSE 100 as copper and oil prices rose. Oil got a boost after the American Petroleum Institute reported a draw of 1.8m barrels in US crude oil inventories last week, versus expectations of a 435,000 draw.

Galliford Try gained ground as it said it has abandoned its plans to make a formal bid for rival housebuilder Bovis Homes, a week after Redrow threw the towel in.

Meanwhile, Bovis advanced after announcing the appointment of former Galliford Try boss Greg Fitzgerald as its new chief executive.

Wood Group rallied as it said it had found another £40m in annual savings as part of the £2.2bn agreed merger with rival outfit Amec Foster Wheeler.

Design, engineering and project management consultancy WS Atkins pushed higher after saying it would pay £34.5m into its pension fund in the current financial year after it revealed a deficit of £318m.

Shares in Irish services group DCC rose after it agreed to buy Royal Dutch Shell's liquefied petroleum gas business in Hong Kong and Macau for about £120m (HK$1.16bn), subject to regulatory consent.

Medical technology company ConvaTec edged up as it announced the US launch of ‘Foam Lite’ ConvaTec dressing on Wednesday, which it described as a light, flexible silicone foam dressing for managing low to non-exuding chronic and acute wounds.

Retirement housebuilder McCarthy & Stone slumped after it bumped up its interim dividend 80% but reported a 42% drop in underlying profits for the first half of the year.

Allied Minds tumbled after saying it will discontinue funding at seven subsidiaries for which it expects to write down the value in its 2016 results.

Croda International was under the cosh after Credit Suisse downgraded it to 'underperform' from 'neutral', while Petrofac was hit by a downgrade at Deutsche Bank.

Still to come in the US, the ADP employment report is at 1315 BST, while Markit's services PMI is at 1445 BST and ISM non-manufacturing is at 1500 BST.

After the London close, investors will also be looking out for the latest FOMC minutes at 1900 BST.

Market Movers

FTSE 100 (UKX) 7,330.69 0.12%
FTSE 250 (MCX) 19,014.79 -0.03%
techMARK (TASX) 3,429.62 -0.33%

FTSE 100 - Risers

Antofagasta (ANTO) 857.50p 2.08%
BHP Billiton (BLT) 1,280.00p 1.95%
ITV (ITV) 217.00p 1.64%
Whitbread (WTB) 3,950.00p 1.28%
Royal Dutch Shell 'B' (RDSB) 2,220.00p 1.28%
Centrica (CNA) 217.00p 1.26%
Worldpay Group (WPG) 298.90p 1.18%
Royal Dutch Shell 'A' (RDSA) 2,124.00p 1.17%
DCC (DCC) 7,100.00p 1.14%
Rio Tinto (RIO) 3,298.00p 1.03%

FTSE 100 - Fallers

Old Mutual (OML) 191.30p -3.72%
Croda International (CRDA) 3,516.00p -2.77%
Smurfit Kappa Group (SKG) 2,050.00p -2.01%
Shire Plc (SHP) 4,662.50p -1.88%
Barratt Developments (BDEV) 539.50p -1.73%
Pearson (PSON) 676.50p -1.53%
AstraZeneca (AZN) 4,882.50p -1.46%
Royal Mail (RMG) 411.70p -1.32%
Taylor Wimpey (TW.) 192.00p -1.18%
TUI AG Reg Shs (DI) (TUI) 1,081.00p -1.10%

FTSE 250 - Risers

Kaz Minerals (KAZ) 493.10p 6.25%
Bovis Homes Group (BVS) 889.00p 5.02%
Vedanta Resources (VED) 844.00p 4.58%
Hunting (HTG) 578.00p 3.68%
Ferrexpo (FXPO) 174.20p 3.32%
Evraz (EVR) 235.50p 3.24%
Sophos Group (SOPH) 311.30p 2.67%
Amec Foster Wheeler (AMFW) 546.50p 2.53%
Wood Group (John) (WG.) 780.00p 2.50%
Fidessa Group (FDSA) 2,597.00p 2.45%

FTSE 250 - Fallers

Allied Minds (ALM) 217.80p -16.55%
IP Group (IPO) 145.00p -3.97%
Petrofac Ltd. (PFC) 894.50p -3.09%
Investec (INVP) 532.00p -2.74%
JRP Group (JRP) 127.00p -2.23%
PayPoint (PAY) 1,036.00p -1.99%
Berkeley Group Holdings (The) (BKG) 3,093.00p -1.97%
Sports Direct International (SPD) 295.20p -1.57%
Capital & Counties Properties (CAPC) 289.10p -1.47%
BTG (BTG) 580.50p -1.44%