London midday: Stocks hold gains as Brexit talks kick off

London stocks were still on the front foot by midday, helped by a reversal in fortunes for retailers, as Brexit negotiations kicked off.

The FTSE 100 was up 0.5% to 7,501.48, while the pound was flat against the euro at 1.1418 and up 0.1% versus the dollar at 1.2791 as the European Union's chief negotiator Michel Barnier and UK Brexit secretary David Davis met in Brussels to formally kick off Brexit negotiations.

Issuing joint comments as they headed into the first meeting, Davis said the talks were taking place in a “positive and constructive” tone, and that "there is more that unites us than divides us”. Davis said Britain was “determined to build a strong and special partnership with our European allies and friends”.

For his part, Barnier said he hoped the first meeting would allow his team to identify a timetable to be presented to EU leaders later this week.

IG analyst Joshua Mahony said: "Today marks the beginning of Brexit negotiations, with David Davis and Michel Barnier finally sitting down to begin thrashing out a deal that will dictate economic relations and prosperity in Europe for years to come. Comments from German Foreign Minister Gabriel have indicated that there is a ‘soft Brexit’ route for the UK, yet with free movement of labour required to enable access to the single market, it is clear that many would be left wondering whether this this is even a Brexit at all.

"The problem is that while the UK voted for Brexit, there is no clear structure of what were the most important elements that the negotiating team should aim to achieve. Certainly from the market’s point of view, the ability to retain EU market access while allowing the UK to do global deals would be ideal."

Investors were also digesting news that one person has been killed and several injured after a man drove into pedestrians near Finsbury Park Mosque in the early hours of Monday morning. The driver of the van, a 48-year old man, has been arrested and the incident is being treated as a potential terrorist attack.

Over in France, President Emmanuel Macron's party won a clear parliamentary majority, weeks after his own presidential victory. His La Republique en Marche won more than 300 seats in the 577-seat National Assembly.

Also on Monday, the latest research from Rightmove revealed that asking prices for houses in the UK are being cut at the sharpest rate in over four years amid political and economic uncertainty, with London and the South East underperforming the rest of the UK.

The price of residential property coming to market in June dropped 0.4% compared to May, with the year-on-year annual rate of price increase slowing to 1.8%, the lowest since April 2013. It was the first time sales had fallen month-on-month in June since 2009, the height of the credit crunch.

In corporate news, Barclays advanced as the Serious Fraud Office was expected to announce as soon as Tuesday whether it had decided to bring criminal charges against some of its bankers in relation to its emergency fundraising at the height of the financial crisis.

Workspace ticked up after announcing the exchange of contracts for the disposal of the third and final phase of the mixed-use redevelopment of Bow Enterprise Park, London E3 on Monday, while outsourcer Capita rallied as Jefferies upgraded its stance on the stock to 'buy' from 'hold' saying the risk/reward is slowly improving.

Ocado surged after a double-upgrade at Exane BNP Paribas and as analysts, including Credit Suisse, highlighted the potential for it to become a takeover target in the wake of Amazon's deal to buy Whole Foods Market last week.

Sainsbury's and Marks & Spencer were also in the black, bouncing back from concerns at the end of last week about the Amazon/Whole Foods tie-up.

On the downside, Cairn Energy was weaker after saying it is seeking $1bn in damages from an international arbitration case in The Hague over its long-running tax dispute with the Indian government, on top of the $104m (£81.4m) that Indian tax authorities signed off last week.

Market Movers

FTSE 100 (UKX) 7,501.48 0.51%
FTSE 250 (MCX) 19,820.47 0.02%
techMARK (TASX) 3,603.08 0.21%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 257.80p 2.18%
Rolls-Royce Holdings (RR.) 927.00p 2.15%
Taylor Wimpey (TW.) 182.00p 2.13%
Wolseley (WOS) 4,859.00p 1.97%
Smurfit Kappa Group (SKG) 2,344.00p 1.91%
Anglo American (AAL) 985.20p 1.85%
Marks & Spencer Group (MKS) 351.40p 1.80%
Glencore (GLEN) 284.55p 1.72%
Royal Bank of Scotland Group (RBS) 253.70p 1.60%
Rio Tinto (RIO) 3,091.50p 1.56%

FTSE 100 - Fallers

Mediclinic International (MDC) 781.50p -1.64%
Hikma Pharmaceuticals (HIK) 1,624.00p -1.16%
Randgold Resources Ltd. (RRS) 7,045.00p -1.12%
Hammerson (HMSO) 596.50p -0.91%
Coca-Cola HBC AG (CDI) (CCH) 2,349.00p -0.84%
InterContinental Hotels Group (IHG) 4,402.00p -0.72%
3i Group (III) 905.00p -0.71%
Pearson (PSON) 709.00p -0.56%
Old Mutual (OML) 201.00p -0.45%
ITV (ITV) 178.10p -0.39%

FTSE 250 - Risers

Ocado Group (OCDO) 295.60p 7.18%
G4S (GFS) 333.60p 3.86%
Capita (CPI) 668.50p 3.56%
Vedanta Resources (VED) 605.50p 3.42%
Mitie Group (MTO) 299.00p 3.21%
PZ Cussons (PZC) 347.20p 3.03%
AO World (AO.) 126.50p 3.01%
Aberdeen Asset Management (ADN) 293.90p 2.98%
Daejan Holdings (DJAN) 6,825.00p 2.63%
Northgate (NTG) 534.50p 2.39%

FTSE 250 - Fallers

CLS Holdings (CLI) 210.00p -5.36%
Clarkson (CKN) 2,568.00p -4.14%
Nostrum Oil & Gas (NOG) 483.30p -3.82%
Cairn Energy (CNE) 181.30p -3.36%
Polymetal International (POLY) 893.50p -3.25%
Morgan Advanced Materials (MGAM) 299.40p -2.89%
Telecom Plus (TEP) 1,209.00p -2.81%
Acacia Mining (ACA) 289.90p -2.46%
Ibstock (IBST) 254.60p -2.45%
Rank Group (RNK) 237.70p -2.38%