London midday: FTSE rises as pound weakens after disappointing UK services PMI

The FTSE 100 advanced on Friday as the pound weakened after data showed growth in the UK services sector eased more than expected in January.

At 1156 GMT, London's top tier index rose 0.52% to 7,1178.11 points.

The pound fell 0.39% against the dollar to $1.2478 and dropped 0.22% versus the euro to €1.1619.

Michael Hewson, chief market analyst at CMC Markets, said: “The pound took another tumble after the latest services PMI for January slipped back more than had been expected, though once again cost inflationary pressures showed no signs of abating, causing firms to also praise prices. This makes the Bank of England decision to keep its inflation forecast unchanged all the more curious.”

The Markit/CIPS UK services purchasing managers’ index declined to 54.5 from 56.2 in December, missing expectations for a reading of 55.8. A level above 50 indicates expansion while a reading below signals contraction.

This was the first time the index fell since September and the reading marked the weakest expansion in three months.

In the eurozone, Markit’s final services PMI printed at 53.7 in January, in line with December and up from the flash estimate of 53.6. Markit’s final composite PMI, which measures services and manufacturing, was unchanged in January from December’s reading of 54.4, but up a touch from the flash estimate of 54.3.

Separate figures from Eurostat showed eurozone retail sales fell 0.3% in December on the month, missing expectations for a 0.3% increase. On the year, retail sales were up 1.1%, undershooting forecasts of a 1.8% rise.

Meanwhile, UK Prime Minister Theresa May arrives in Malta on Friday at the latest EU Summit to discuss her recent meeting with US President Donald Trump. She is expected to say that Trump has vowed to back NATO but that the President wants everyone to contribute financially.

On the company front, mining stocks were under pressure after Caixin’s China manufacturing PMI fell to 51.0 in January from 51.9 in December, below forecasts of 51.8.

Glencore, Antofagasta and BHP Billiton were among the biggest fallers on the FTSE 100.

The banking sector, on the other hand, was given a boost following reports that Donald Trump is seeking to repeal the Dodd-Frank Law rules enacted in response to the 2008 financial crisis. Barclays and Royal Bank of Scotland gained.

Beazley rallied after reporting a 3% jump in full-year profit as gross premiums written increased 6% and the company lifted its dividend.

Budget airline Ryanair flew higher as it said traffic in January rose 17% to 8.77m, while the load factor – which gauges how full the planes are – nudged up to 90% form 88%.

Halma was a high riser after Barclays upgraded its stance on the stock to ‘overweight’ from ‘equalweight’.

Residential repair and improvements business HomeServe edged higher as it said it has acquired shareholdings in Checkatrade in the UK and Habitissimo in Spain. The FTSE 250 company purchased a 40% interest in Checkatrade, and a 70% interest in Habitissimo, with the deals being worth a combined £37m.

Looking ahead to afternoon trade, the US non-farm payrolls report will be in focus at 1330 GMT. Analysts predict employers added 175,000 jobs in January and the unemployment rate held at 4.7%.

Market Movers

FTSE 100 (UKX) 7,177.80 0.52%
FTSE 250 (MCX) 18,387.27 0.70%
techMARK (TASX) 3,274.91 0.67%

FTSE 100 - Risers

Barclays (BARC) 227.25p 2.67%
Prudential (PRU) 1,593.50p 2.64%
DCC (DCC) 6,445.00p 2.38%
Sage Group (SGE) 635.00p 2.09%
Aviva (AV.) 489.80p 1.96%
Legal & General Group (LGEN) 237.30p 1.93%
Admiral Group (ADM) 1,827.00p 1.90%
ITV (ITV) 205.30p 1.89%
Royal Bank of Scotland Group (RBS) 226.60p 1.84%
Hargreaves Lansdown (HL.) 1,383.00p 1.84%

FTSE 100 - Fallers

Glencore (GLEN) 314.20p -3.32%
Antofagasta (ANTO) 816.50p -2.86%
Rio Tinto (RIO) 3,419.00p -2.73%
BHP Billiton (BLT) 1,396.50p -2.55%
Anglo American (AAL) 1,344.00p -2.43%
Fresnillo (FRES) 1,451.00p -2.22%
Royal Mail (RMG) 406.30p -1.02%
Johnson Matthey (JMAT) 3,209.00p -0.96%
Dixons Carphone (DC.) 310.90p -0.83%
Rolls-Royce Holdings (RR.) 670.00p -0.59%

FTSE 250 - Risers

Beazley (BEZ) 444.50p 8.76%
Halma (HLMA) 968.50p 4.59%
Indivior (INDV) 315.50p 3.92%
Hiscox Limited (DI) (HSX) 1,070.00p 3.88%
Playtech (PTEC) 878.50p 3.60%
Wizz Air Holdings (WIZZ) 1,611.00p 3.27%
OneSavings Bank (OSB) 350.00p 2.94%
Savills (SVS) 797.50p 2.90%
William Hill (WMH) 276.10p 2.83%
Paysafe Group (PAYS) 398.10p 2.55%

FTSE 250 - Fallers

Evraz (EVR) 231.60p -2.73%
Vedanta Resources (VED) 1,063.00p -2.30%
IP Group (IPO) 182.80p -1.88%
Sophos Group (SOPH) 261.80p -1.76%
Hochschild Mining (HOC) 236.40p -1.66%
Kaz Minerals (KAZ) 497.30p -1.62%
Allied Minds (ALM) 383.90p -1.54%
CLS Holdings (CLI) 1,552.00p -1.21%
Polymetal International (POLY) 934.50p -1.11%
Aldermore Group (ALD) 218.60p -1.09%