London midday: Stocks flat as services PMI disappoints

London stocks were flat again by midday on Wednesday, giving up mid-morning gains as investors digested the release of disappointing services data.

The FTSE 100 was steady at 7,355.78, while the pound was up 0.1% against the euro at 1.1401 and down 0.1% against the dollar at 1.2908.

Meanwhile, oil prices tanked as Russia ruled out any proposals to deepen OPEC-led production cuts. According to a Bloomberg report, Russia wants to continue with the current deal and said any further supply cuts would send the wrong message to the market. West Texas Intermediate was down 1.5% to $46.36 a barrel and Brent crude was 1.4% lower at $48.93.

Earlier, the UK's services sector was revealed to have weakened to its lowest in four months in June, while business optimism dropped to its second-lowest in over five and half years.

The UK Markit/CIPS services purchasing managers' index for June fell to 53.4 from the prior month's 53.8 and shy of the consensus forecast of 53.5. Following disappointing PMIs for the manufacturing and construction sectors earlier in the week it meant the UK composite PMI for June dropped to 53.8 from 54.3 and below the market's expectation of 53.9.

Level of business optimism declined to the weakest since December 2011, save for the post-referendum dip last summer.

IG analyst Joshua Mahony said: "With the services sector forming such a crucial component of the UK economy, today’s survey provides an expectation that UK GDP will remain depressed around the 0.4% level in Q2. The decline of the pound was always likely given a lower than expected services PMI reading this morning."

The uninspiring macro news didn't end there, as data from the Office for National Statistics showed UK productivity fell in the first three months of the year, marking the first drop since late 2015.

On the corporate front, Worldpay rallied again following a report that the company's board is close to backing an £8.5bn takeover from US rival Vantiv Inc.

Shares in online grocery specialist Ocado ticked up as it increased orders volumes and revenues in the first half of the year but saw profits shrink due to investments in its Andover 'customer fulfilment centre'.

Housebuilder Persimmon was also on the front foot after laying an excellent foundation to its financial year, reporting resilient consumer confidence and strong momentum moving into the second half. Peers Barratt Developments and Taylor Wimpey followed suit.

Elsewhere in the wider building sector, retirement housebuilder McCarthy & Stone advanced as it said the UK general election led to a slowdown in sales momentum in recent weeks but that underlying trading conditions remained stable, while building products distributor SIG surged as it said trading in the first half was as expected and the second half should be stronger.

Booker traded higher after it reported growth in like-for-like sale in the first quarter thanks to the late Easter and favourable weather, lifting shares in Tesco, which is awaiting clearance for its takeover of the food wholesaler and convenience store owner.

Still to come, the latest FOMC minutes are due to be released at 1900 BST.

Market Movers

FTSE 100 (UKX) 7,358.77 0.02%
FTSE 250 (MCX) 19,403.32 0.53%
techMARK (TASX) 3,484.32 -0.01%

FTSE 100 - Risers

Tesco (TSCO) 173.80p 4.01%
Worldpay Group (WPG) 424.10p 3.95%
G4S (GFS) 336.50p 3.13%
Persimmon (PSN) 2,353.00p 2.71%
Glencore (GLEN) 310.75p 2.36%
Barratt Developments (BDEV) 578.00p 2.03%
Rolls-Royce Holdings (RR.) 914.50p 1.95%
Taylor Wimpey (TW.) 178.70p 1.65%
Provident Financial (PFG) 2,358.00p 1.59%
Convatec Group (CTEC) 318.20p 1.43%

FTSE 100 - Fallers

Fresnillo (FRES) 1,455.00p -1.89%
Randgold Resources Ltd. (RRS) 6,745.00p -1.53%
Johnson Matthey (JMAT) 2,841.00p -1.35%
GlaxoSmithKline (GSK) 1,607.00p -1.32%
Royal Dutch Shell 'B' (RDSB) 2,076.00p -1.19%
Barclays (BARC) 204.75p -1.06%
BP (BP.) 445.40p -1.02%
Royal Dutch Shell 'A' (RDSA) 2,052.50p -0.99%
Lloyds Banking Group (LLOY) 65.71p -0.92%
Centrica (CNA) 202.10p -0.88%

FTSE 250 - Risers

Sirius Minerals (SXX) 30.23p 5.15%
AA (AA.) 238.00p 4.62%
SIG (SHI) 151.90p 4.11%
Booker Group (BOK) 190.80p 3.58%
Aveva Group (AVV) 2,014.00p 2.97%
Aldermore Group (ALD) 220.40p 2.85%
Euromoney Institutional Investor (ERM) 1,080.00p 2.76%
CLS Holdings (CLI) 207.00p 2.68%
Virgin Money Holdings (UK) (VM.) 295.70p 2.67%
Stagecoach Group (SGC) 190.30p 2.53%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 274.80p -2.90%
Tullow Oil (TLW) 159.10p -1.85%
esure Group (ESUR) 295.50p -1.73%
Petrofac Ltd. (PFC) 459.40p -1.54%
Wetherspoon (J.D.) (JDW) 953.00p -1.50%
Hochschild Mining (HOC) 262.90p -1.31%
Cobham (COB) 127.10p -1.24%
Ascential (ASCL) 325.90p -1.24%
Hunting (HTG) 511.50p -1.06%
Amec Foster Wheeler (AMFW) 469.40p -0.89%