London midday: Rising pound weighs on stocks but banks limit losses

London's stock indices were stuttering lower by midday on Thursday as the pound rose amid hawkish central bank talk in Europe and the US, though this was good news for banks and life insurers.

Just after noon the FTSE 100 was down 0.7% at just over 7,317, while the FTSE 250 was down more than 0.5% to below 19,350, giving up most of its gains from a solid previous session.

Minutes from the June's meeting of Federal Reserve rate setters suggested they were readying for the great unwinding of the nation's balance sheet, despite continued disappointing inflation data.

Furthermore, equities in London and Europe were nursing losses as positive comment from European Central Bank members and expectations of hawkish ECB minutes.

The pound was up 0.1% at 1.2946, with a stronger pound generally weighing on the FTSE 100, as a large majority of stocks earn much of their profits overseas.

"This is due to a stronger EUR pushing USD lower, and thus GBP higher, hurting their international contingents," van Dulken said. "Oil is clawing back lost ground, along with metal prices, but FX moves are driving sentiment."

Not everywhere, however, with banks RBS, Barclays and Lloyds were higher as government bond yields rise in tandem with Fed tightening, with UK banks having the next tightest correlation to US treasury yields. Likewise life insurers Avia and Legal & General were battling the sinking tide as their fortunes are also closely linked to these yields.

Oil prices continued to zigzag, with a 1.2% rebound of Brent crude on Thursday to $48.38 thanks to US API inventory data showing a 5.8m barrel drawdown, following a 2.7% drop on Wednesday that came after an eight day rise.

A host of stocks going ex-dividend on Thursday was a definite weight on the main indices, with the list including Burberry, N Brown, Dairy Crest, Homeserve, Next, Pennon, Talktalk and Telecom Plus.

Top of the FTSE 100 leaderboard was Associated British Foods as it reported an improved performance in the third quarter, with particularly strong trading at its Primark clothing retail arm that has slightly lifted the full year expectations. Primark sales grew 21% in the for the 40 weeks to 24 June and 15% at constant currency rates versus the 22% at actual rates and 12% constant in the first half of the year.

Housebuilding stocks were up for a second day, boosted as embattled Bovis Homes said its trading performance for the first six months of 2017 was in-line with management expectations. This followed a strong update from Persimmon the previous session, which saw it, Barratt and Taylor Wimpey extending their gains for a second day.

ITV shares were up slightly and Easyjet down as reports emerged that the broadcaster is about to poach Dame Carolyn McCall to be its new chief executive. Easyjet also reported an 11.3% increase in the number of passengers it carried in June to reach 7.720m, alongside a 0.8 percentage point improvement in its so-called load factor to 94.8%.

Shire was boosted as HSBC lifted its rating to 'hold' as it said the drugmaker's haemophilia headline risk from rival Roche's plans was now "largely in the price".

Reckitt Benckiser shares fell after it updated the market on the cyberattack which happened on 27 June, claiming it had made “good progress” in getting key applications and systems “back on track” so it could resume normal trading with all of its customers and partners. But the company now expects like-for-like net revenue in 2017 to increase by about 2%, down from an earlier growth forecast of 3%, which would equate to about £100m in lost revenue.

Dairy Crest was down amid 'scaremongering' stories about shortages of butter and cheese dairy products in the UK later this year.

Market Movers

FTSE 100 (UKX) 7,317.11 -0.69%
FTSE 250 (MCX) 19,360.74 -0.47%
techMARK (TASX) 3,487.53 -0.53%

FTSE 100 - Risers

Associated British Foods (ABF) 3,009.00p 2.98%
Royal Bank of Scotland Group (RBS) 259.40p 1.45%
Aviva (AV.) 538.50p 1.13%
Royal Mail (RMG) 424.30p 1.10%
Barclays (BARC) 206.20p 0.98%
Legal & General Group (LGEN) 266.00p 0.80%
Shire Plc (SHP) 4,366.50p 0.76%
Admiral Group (ADM) 2,022.00p 0.65%
Lloyds Banking Group (LLOY) 66.09p 0.61%
Barratt Developments (BDEV) 584.50p 0.43%

FTSE 100 - Fallers

Worldpay Group (WPG) 360.80p -3.01%
Convatec Group (CTEC) 301.40p -2.77%
Next (NXT) 3,800.00p -2.69%
Smurfit Kappa Group (SKG) 2,339.00p -2.58%
Burberry Group (BRBY) 1,604.00p -2.20%
Sainsbury (J) (SBRY) 246.60p -2.10%
Reckitt Benckiser Group (RB.) 7,539.00p -2.09%
Provident Financial (PFG) 2,352.00p -2.08%
Ashtead Group (AHT) 1,553.00p -2.08%
Micro Focus International (MCRO) 2,178.00p -2.07%

FTSE 250 - Risers

Lancashire Holdings Limited (LRE) 738.00p 3.87%
Sirius Minerals (SXX) 31.38p 3.56%
Greene King (GNK) 667.50p 2.69%
TBC Bank Group (TBCG) 1,659.00p 2.34%
CLS Holdings (CLI) 210.00p 2.04%
Intermediate Capital Group (ICP) 884.50p 1.55%
Beazley (BEZ) 512.00p 1.39%
Hiscox Limited (DI) (HSX) 1,299.00p 1.33%
Wizz Air Holdings (WIZZ) 2,476.00p 1.27%
Daejan Holdings (DJAN) 6,415.00p 1.26%

FTSE 250 - Fallers

Nostrum Oil & Gas (NOG) 479.00p -6.35%
Caledonia Investments (CLDN) 2,860.00p -3.87%
Dairy Crest Group (DCG) 563.50p -3.43%
Telecom Plus (TEP) 1,114.00p -3.38%
Pennon Group (PNN) 794.00p -3.29%
Mitie Group (MTO) 267.20p -3.19%
Northgate (NTG) 440.00p -3.11%
ZPG Plc (ZPG) 353.10p -3.07%
Softcat (SCT) 373.80p -2.98%
Melrose Industries (MRO) 236.30p -2.64%