London midday: Stocks edge higher as banks, housebuilders gain

London stocks had reversed course by midday on Wednesday, edging higher thanks to a strong showing from banks and housebuilders.

The FTSE 100 was up 0.3% to 7,544.38, while the pound was up 0.5% versus the euro and down 0.1% against the dollar at 1.503 and 1.2896, respectively.

With just one day to go before the UK general election, Citigroup sees a Conservative victory as the base case, but acknowledged that risks of alternative outcomes have risen significantly in the last three to four weeks.

"The average of five leading polls shows that the Conservative lead over Labour is down from circa 20%+ just after Prime Minister Theresa May called a snap election in April 2017 to around 5% now. Traditional turn-out patterns, i.e. higher with age, should still return a Conservative majority, but polls suggest a close election."

Citi said it sees little market impact from a Tory victory with a reasonable majority, such as around 40 seats.

"But, other outcomes carry more risk due to implications for GBP, Brexit, nationalisation, banks and corporate tax," it said, adding that the pound is likely to be sharply lower in a Labour-led government. "The Brexit path is less clear in anything but a reasonable Conservative majority. Nationalisation, headwinds for banks and higher corporate taxes = equity negative and are on the menu for a Labour-led government."

Aside from the election, investors were also awaiting an ECB meeting on Thursday, during which policymakers are expected to take a less dovish tone, and a testimony by former FBI boss James Comey before the Senate panel on Russia's involvement in the US presidential election.

Housebuilders Taylor Wimpey and Persimmon got a boost as the latest figures from mortgage lender Halifax showed UK house prices held up better than expected last month, although the year-on-year rate of price gains continued to cool.

Bank stocks gained after Banco Santander rescued struggling Banco Popular from collapse, picking it up for just €1. RBS, Lloyds Banking Group and Barclays were all trading higher, with RBS also lifted by upgrade at Investec.

Anglo American was firmer after it announced the appointment of Stuart Chambers as its chairman, while serviced office group Workspace rallied after upping its dividend by a whopping 40% as annual profits fell due to a smaller property valuation, but its net asset value per share swelled 3.3%.

AstraZeneca was in the red as it entered an agreement with Grünenthal for the global rights to Zomig (zolmitriptan) outside Japan.

Plastic products design and engineering group RPC was on the back foot, reversing earlier gains despite saying that profit more than doubled in the year to the end of March, with analysts pointing to exceptional costs of £116m.

Tate & Lyle was hit by a downgrade to 'hold' at Jefferies, but Tullow Oil got a boost as Barclays reinstated its rating on the stock at 'overweight'.

Market Movers

FTSE 100 (UKX) 7,544.38 0.26%
FTSE 250 (MCX) 19,765.05 0.56%
techMARK (TASX) 3,631.82 -0.08%

FTSE 100 - Risers

Royal Bank of Scotland Group (RBS) 258.30p 2.62%
Taylor Wimpey (TW.) 183.10p 2.29%
Persimmon (PSN) 2,398.00p 2.26%
Lloyds Banking Group (LLOY) 70.30p 1.97%
Legal & General Group (LGEN) 255.80p 1.91%
RSA Insurance Group (RSA) 618.00p 1.64%
Hargreaves Lansdown (HL.) 1,398.00p 1.60%
Intu Properties (INTU) 268.60p 1.55%
Glencore (GLEN) 287.00p 1.52%
Barclays (BARC) 212.60p 1.48%

FTSE 100 - Fallers

Shire Plc (SHP) 4,444.50p -1.71%
AstraZeneca (AZN) 5,286.00p -1.29%
Royal Mail (RMG) 435.00p -1.11%
Tesco (TSCO) 179.90p -0.96%
Associated British Foods (ABF) 2,991.00p -0.96%
Johnson Matthey (JMAT) 3,013.00p -0.86%
Babcock International Group (BAB) 917.00p -0.81%
Croda International (CRDA) 3,933.00p -0.68%
GlaxoSmithKline (GSK) 1,691.50p -0.56%
British American Tobacco (BATS) 5,613.00p -0.53%

FTSE 250 - Risers

Tullow Oil (TLW) 178.00p 4.09%
AA (AA.) 230.60p 3.64%
Howden Joinery Group (HWDN) 456.70p 3.56%
Ferrexpo (FXPO) 173.20p 3.53%
CYBG (CYBG) 270.80p 3.40%
St. Modwen Properties (SMP) 342.90p 3.22%
Derwent London (DLN) 2,660.00p 3.10%
Nostrum Oil & Gas (NOG) 524.50p 3.05%
Virgin Money Holdings (UK) (VM.) 289.50p 2.99%
Evraz (EVR) 196.50p 2.72%

FTSE 250 - Fallers

Entertainment One Limited (ETO) 229.20p -2.63%
Ocado Group (OCDO) 301.50p -2.24%
Hochschild Mining (HOC) 307.20p -2.17%
RPC Group (RPC) 832.50p -2.06%
Indivior (INDV) 327.80p -1.83%
Intermediate Capital Group (ICP) 856.50p -1.32%
Capita (CPI) 546.00p -1.27%
Fisher (James) & Sons (FSJ) 1,739.00p -1.25%
Computacenter (CCC) 840.50p -1.12%
JD Sports Fashion (JD.) 436.90p -1.11%