London midday: Stocks decline on mixed UK GDP report

London stocks reversed gains on Thursday after a mixed report on UK economic growth in the fourth quarter.

The Office for National Statistics said UK gross domestic product rose 0.5% quarter-on-quarter in the final three months of 2015, up from 0.4% in the third quarter, as expected by analysts.

However, year-on-year GDP growth fell to 1.9% in the fourth quarter from 2.1% the previous quarter.

GDP also slowed overall in 2015 to an annualised 2.2% from 2.9% a year earlier.

“The rather mixed message sent by the fourth quarter figure, then, helps to clarify why an air of negativity has begun to creep into the markets this Thursday morning, with the FTSE abandoning its gains to fall into the red by around 10-15 points,” said Connor Campbell, financial analyst at Spreadex.

Vicky Redwood, chief UK economist at Capital Economics, said while the quarterly growth in GDP showed a slight improvement, it was still under the economy’s probable trend rate.

She believes growth was not strong enough to meet one of Bank of England Governor Mark Carney’s three conditions for raising interest rates.

The BoE announces its latest policy decision next Thursday but it is expected to keep interest rates unchanged at 0.5% amid weak global growth and low inflation.

The Federal Open Market Committee also expressed concerns about the global economic slowdown, as it voted unanimously to maintain rates at 0.50%, as expected by analysts.

In the Fed’s accompanying statement, it said it was closely monitoring global economic and financial developments, providing little indication on when it might next raise rates.

"Inflation is expected to remain low in the near term," the Fed said.

Yet the Fed said it expects the economy to continue to grow "at a moderate pace”, supported by a strong labour market.

Elsewhere, consumer confidence in the Eurozone fell more than expected in January. The European Commission’s economic sentiment indicator slipped to 105 from 106.7 in December, falling short of economists’ expectations for a reading of 106.4.

Still to come, German inflation is due at 1300 GMT, US initial jobless claims and durable goods orders will be released at 1330 GMT and US pending home sales will be published 1500 GMT.

Meanwhile, oil prices were sitting higher, giving a boost to company stocks in the sector including Royal Dutch Shell, BP, BG Group and Tullow Oil. At 1135 GMT Brent crude rose 1.8% to $33.72 per barrel and West Texas Intermediate grew 1.07% to $32.65 per barrel.

Among other corporate stocks, Diageo’s shares fell after the drinks company posted a drop in revenue in the first half.

FirstGroup tumbled after the transport operator lowered its operating profit guidance for the current financial year amid a challenging trading environment.

Mitchells & Butlers advanced after the pub company reported strong Christmas and New Year sales limited the damage to its sales figures for the nine weeks to 23 January.

Kier Group jumped after saying full-year trading is in line with expectations, sending shares surging.

Market Movers

FTSE 100 (UKX) 5,961.20 -0.49%
FTSE 250 (MCX) 16,231.15 -0.31%
techMARK (TASX) 3,128.19 -0.82%

FTSE 100 - Risers

Anglo American (AAL) 276.05p 8.79%
Antofagasta (ANTO) 383.70p 2.21%
Royal Dutch Shell 'B' (RDSB) 1,487.00p 1.71%
Royal Dutch Shell 'A' (RDSA) 1,487.00p 1.64%
Old Mutual (OML) 162.30p 1.63%
Fresnillo (FRES) 714.50p 1.13%
BG Group (BG.) 1,040.50p 1.07%
Tesco (TSCO) 162.65p 1.02%
Pearson (PSON) 778.50p 0.91%
BP (BP.) 365.80p 0.80%

FTSE 100 - Fallers

Ashtead Group (AHT) 904.00p -6.32%
Centrica (CNA) 201.00p -4.33%
ARM Holdings (ARM) 971.00p -2.46%
Royal Bank of Scotland Group (RBS) 249.50p -2.42%
International Consolidated Airlines Group SA (CDI) (IAG) 539.50p -2.35%
CRH (CRH) 1,822.00p -2.31%
Vodafone Group (VOD) 218.20p -2.24%
Hikma Pharmaceuticals (HIK) 1,953.00p -2.06%
Mondi (MNDI) 1,146.00p -1.97%
Carnival (CCL) 3,551.00p -1.80%

FTSE 250 - Risers

Vedanta Resources (VED) 229.00p 7.31%
Tullow Oil (TLW) 159.50p 4.32%
Drax Group (DRX) 244.50p 4.22%
Kier Group (KIE) 1,257.00p 3.29%
AO World (AO.) 155.30p 2.85%
Mitchells & Butlers (MAB) 288.70p 1.87%
Ibstock (IBST) 212.80p 1.87%
Interserve (IRV) 466.70p 1.66%
Acacia Mining (ACA) 197.20p 1.60%
Wood Group (John) (WG.) 612.00p 1.58%

FTSE 250 - Fallers

Melrose Industries (MRO) 283.00p -85.31%
FirstGroup (FGP) 93.05p -9.04%
Go-Ahead Group (GOG) 2,391.00p -5.27%
PayPoint (PAY) 795.50p -4.16%
TalkTalk Telecom Group (TALK) 208.30p -3.52%
Renishaw (RSW) 1,728.00p -3.14%
OneSavings Bank (OSB) 315.00p -2.75%
Carillion (CLLN) 270.20p -2.60%
Home Retail Group (HOME) 145.90p -2.47%
PZ Cussons (PZC) 251.50p -2.37%