London midday: Stocks fall as UK unemployment rises

London stocks dropped on Wednesday after labour market data revealed UK unemployment rose for the first time since mid-2015 in the three months to February.

The number of people in unemployment increased by 21,000 to 1.7m during the period, according to the Office for National Statistics. Yet the unemployment rate remained at 5.1%, as expected by analysts, its lowest since November 2005.

The report also showed the number of people in employment climbed by 20,000 to 31.41m, well below estimates for a 60,000 increase.

Average weekly earnings grew 1.8%, missing forecasts for a 2.3% increase and marking a slowdown from the previous quarter’s 2.1% gain.

"Last week the Bank of England said that concerns about the EU referendum had begun to affect the real economy, and the increase in unemployment announced today adds some weight to that hypothesis," said Ben Brettell, senior economist at Hargreaves Lansdown.

"It’s possible businesses are delaying decisions about hiring and investment until after June’s vote, which could lead to a slowdown in the first two quarters of this year."

A drop in oil prices also weighed on sentiment. A three-day strike by oil workers over pay in Kuwait, which ended on Tuesday night, had disrupted production. However, the news lifted oil prices on Tuesday amid concerns about an oversupply.

Traders will now be closely scrutinising the US government’s weekly crude inventories report at 1530 BST.

At 1206 BST, Brent crude fell 1.4% to $43.39 per barrel and West Texas Intermediate fell 1.7% to $41.76 per barrel.

In company news, shares in ARM Holdings jumped after the chip maker reported a 14% increase in first quarter revenue that surpassed analysts’ expectations.

BHP Billiton rallied after saying it was on track to deliver an average unit cost improvement of 14% across its major assets, with productivity gains continuing to be realised.

Burberry was in the red after Goldman Sachs downgraded the stock to ‘neutral’ from ‘buy’ in a report released to investors.

BT Group slumped after Jefferies downgraded it to ‘hold’ from ‘buy’ and cut the price target to 475p from 515p, pointing to impaired visibility.

N Brown declined as Peel Hunt downgraded it to 'reduce' after the specialist fit clothing retailer ran into challenging conditions in the new financial year.

Market Movers

FTSE 100 (UKX) 6,379.40 -0.41%
FTSE 250 (MCX) 16,970.70 -0.43%
techMARK (TASX) 3,163.19 -0.83%

FTSE 100 - Risers

Anglo American (AAL) 783.90p 4.17%
Intertek Group (ITRK) 3,331.00p 3.13%
Antofagasta (ANTO) 504.50p 2.37%
GKN (GKN) 302.40p 2.27%
ARM Holdings (ARM) 985.50p 2.23%
BHP Billiton (BLT) 982.90p 1.91%
Rio Tinto (RIO) 2,376.50p 1.86%
Mediclinic International (MDC) 916.50p 1.78%
Whitbread (WTB) 3,853.00p 1.53%
Royal Bank of Scotland Group (RBS) 246.70p 1.52%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,319.00p -4.07%
Paddy Power Betfair (PPB) 9,050.00p -3.00%
Provident Financial (PFG) 2,934.00p -2.82%
ITV (ITV) 231.70p -2.81%
BT Group (BT.A) 439.95p -2.47%
Randgold Resources Ltd. (RRS) 6,550.00p -2.46%
TUI AG Reg Shs (DI) (TUI) 1,021.00p -2.39%
Rolls-Royce Holdings (RR.) 680.50p -2.30%
Direct Line Insurance Group (DLG) 353.20p -1.73%
Imperial Brands (IMB) 3,710.50p -1.58%

FTSE 250 - Risers

Allied Minds (ALM) 393.80p 4.10%
Vedanta Resources (VED) 417.80p 3.93%
JRP Group (JRP) 140.50p 3.54%
IP Group (IPO) 169.30p 3.23%
CLS Holdings (CLI) 1,659.00p 2.85%
Aggreko (AGK) 1,138.00p 2.80%
Rentokil Initial (RTO) 181.30p 2.60%
DFS Furniture (DFS) 312.40p 2.43%
Senior (SNR) 224.10p 2.42%
Evraz (EVR) 147.20p 2.22%

FTSE 250 - Fallers

Brown (N.) Group (BWNG) 270.20p -14.39%
John Laing Group (JLG) 218.20p -4.13%
Pendragon (PDG) 35.28p -3.47%
Ted Baker (TED) 2,382.00p -3.45%
Lookers (LOOK) 142.10p -3.33%
Shawbrook Group (SHAW) 261.50p -3.08%
Aldermore Group (ALD) 180.60p -2.90%
Debenhams (DEB) 79.45p -2.58%
Cranswick (CWK) 2,301.00p -2.38%
Rightmove (RMV) 3,911.00p -2.03%