London midday: Stocks fall as investors shrug off positive UK jobs report

London stocks fell slightly on Wednesday as official data showing a better-than-expected increase in employment and a surprise drop in jobless claims failed to lift investors' spirits.

The number of people in work rose by 172,000 to 31.750m in the three months to June, pushing the employment rate to 74.5% a latest record high, the Office for National Statistics revealed. Economists had expected a 153,000 increase.

Jobless claims fell by 8,600 in July, astonishing analysts who had predicted a 9,000 increase in the number of people claiming unemployment benefits.

The claimant rate remained at 2.2%, as estimated by economists.

Unemployment remained at 4.9% in the three months to June, also as expected.

Average weekly earnings grew 2.4% during the quarter, though the market expected the improvement from the 2.3% reading in May.

“The labour market data showed impressive resilience in the run-up to the EU referendum and the immediate aftermath of the vote to leave – although it is premature to draw any firm conclusions from this,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“While the data suggests that companies generally avoided a knee-jerk reaction to the leave vote by getting rid of workers, it remains likely that softening economic activity and heightened uncertainty will take a toll on the labour market over the coming months.”

The pound fell 0.20% to $1.3020 at 1120 BST.

Looking ahead to afternoon trade, US weekly crude inventories data from the Energy Information Administration will be in focus at 1530 BST.

Oil prices reversed a four-day rally before the release of the report, with Brent crude down 0.90% to $48.79 per barrel and West Texas Intermediate down 0.80% to $46.21 per barrel at 1125 BST.

Meanwhile, Federal Reserve Bank of St. Louis President James Bullard is due to speak in his city at 1800 BST. His speech follows two hawkish statements from fellow Fed policymakers William Dudley and Dennis Lockhart on Tuesday, who both separately suggested an interest rate hike was on the table at the September policy meeting.

The Fed releases the minutes of its 26-27 July policy meeting at 1900 BST, which may offer more clues on the timing of the next interest rate rise.

"Of particular interest will be what the Fed was referring to when it claimed that 'near-term risks to the economic outlook have diminished'," said Craig Erlam, senior market analyst at Oanda.

"If the Fed is of the belief that Brexit will have limited impact on the economy and the outlook remains as it was prior to the vote, then a rate hike this year remains a very real possibility. That said, growth in the second quarter was very disappointing again and while the two revisions could change our view on that, it is likely to complicate things."

In corporate news, aerospace and defence group Cobham rallied after announcing that chief executive officer Bob Murphy will step down from his role by the end of 2016 to pursue other opportunities and will be succeeded by David Lockwood no later than 1 January 2017.

FTSE 250 construction group Balfour Beatty surged after it reinstated its dividend as it reported a smaller loss for the half year ended 1 July.

Indivior rocketed after saying its new heroin addiction treatment has proved successful in late-stage clinical trials, meaning it could be approved for sale in the US by the end of next year.

Savills was given a boost as Citigroup upgraded the stock to ‘buy’ from ‘neutral’ following solid first-half results.

On the downside, insurer Admiral was sharply lower amid concerns about the group’s Solvency II position, after it lifted its interim dividend by almost a quarter and posted a jump in first-half profits.

Standard Chartered was in the red after HSBC downgraded the stock to ‘hold’ from ‘buy’ and reiterated a target price of 650p, saying it was unlikely to reach its return on equity target of 8% in 2018 unless revenues rebound about $3bn.

Market Movers

FTSE 100 (UKX) 6,882.86 -0.16%
FTSE 250 (MCX) 17,800.73 -0.04%
techMARK (TASX) 3,520.39 0.14%

FTSE 100 - Risers

CRH (CRH) 2,558.00p 1.83%
Whitbread (WTB) 4,061.00p 1.50%
BT Group (BT.A) 398.05p 1.39%
Paddy Power Betfair (PPB) 9,775.00p 1.24%
Merlin Entertainments (MERL) 482.10p 0.84%
Vodafone Group (VOD) 238.10p 0.70%
Persimmon (PSN) 1,747.00p 0.63%
Royal Mail (RMG) 515.00p 0.59%
Unilever (ULVR) 3,629.50p 0.53%
Carnival (CCL) 3,642.00p 0.52%

FTSE 100 - Fallers

Admiral Group (ADM) 2,068.00p -8.25%
Standard Chartered (STAN) 629.70p -3.58%
Antofagasta (ANTO) 542.50p -2.86%
Glencore (GLEN) 191.85p -2.56%
Old Mutual (OML) 209.00p -2.11%
Hargreaves Lansdown (HL.) 1,310.00p -2.09%
Anglo American (AAL) 873.20p -1.89%
Rio Tinto (RIO) 2,441.50p -1.81%
Mediclinic International (MDC) 1,090.00p -1.80%
International Consolidated Airlines Group SA (CDI) (IAG) 387.70p -1.67%

FTSE 250 - Risers

Indivior (INDV) 339.80p 12.89%
Savills (SVS) 750.00p 7.30%
Balfour Beatty (BBY) 261.50p 7.00%
Daejan Holdings (DJAN) 5,650.00p 3.57%
PayPoint (PAY) 997.50p 3.48%
Cobham (COB) 164.90p 2.87%
Cairn Energy (CNE) 209.80p 2.84%
Pendragon (PDG) 32.97p 2.84%
Morgan Advanced Materials (MGAM) 294.20p 2.44%
Paragon Group Of Companies (PAG) 298.90p 2.22%

FTSE 250 - Fallers

Laird (LRD) 308.60p -6.77%
Ibstock (IBST) 172.00p -4.76%
Hochschild Mining (HOC) 299.90p -4.40%
Entertainment One Limited (ETO) 246.10p -3.26%
NMC Health (NMC) 1,290.00p -3.01%
Polypipe Group (PLP) 271.90p -2.89%
Vedanta Resources (VED) 532.50p -2.56%
Euromoney Institutional Investor (ERM) 1,081.00p -2.52%
Aveva Group (AVV) 1,902.00p -2.46%
Telecom Plus (TEP) 1,016.00p -2.40%