London midday: Stocks maintain gains as investors digest construction PMI

Stocks in London were maintaining moderate gains by midday on Tuesday, underpinned by a weaker pound as investors digested a slowdown in UK construction sector growth.

The FTSE 100 was up 0.4% to 7,308.17, while the pound was down 0.3% at $1.2448. A weaker sterling tends to benefit the index, as around 70% of its constituents derive their earnings from overseas.

The Markit/CIPS UK construction purchasing managers' index fell to 52.2 for March from 52.5 in February, a level at which economists expected it to remain. A PMI index reading above 50 indicates growth.

A slowdown in growth was seen across the UK construction sector, led by a weaker rise in residential building activity, while a modest increase in new work contributed to employment levels slowing to a three-month low but remaining in growth mode.

Civil engineering was the sector’s main growth engine in March, with data showing a slight rebound in commercial construction activity.

"The UK PMI slowdown continued apace this morning, with the construction PMI providing yet another disappointing survey result for the industry," IG analyst Joshua Mahony said.

"We could be in for a period of muted activity for the construction sector, given the investment uncertainty post-Article 50 and last week’s data from Nationwide suggesting house prices fell for the first time since mid-2015.

"Yet another weak PMI reading only serves to compound fears over the UK economy as we move into an increasingly hostile Brexit negotiation environment."

Gold stocks put in a solid performance as prices of the yellow metal rallied, with Fresnillo and Randgold Resources at the top of the FTSE 100 leaderboard.

Among individual stocks, online security specialist Sophos surged as it boasted that its full year earnings and cash flow are likely to outshine the consensus forecast after a very strong end to the fourth quarter.

Distribution giant Bunzl was on the front foot after saying it has bought two safety businesses in the US and Italy for an undisclosed sum.

Provident Financial advanced as it updated the market on its medium-term financial guidance ahead of its capital markets day.

Central and Eastern-Europe-focussed low cost airline Wizz Air nudged up after it reported a 19% rise in passenger numbers in March as the load factor ticked up to 90.4% from 86.3% in March 2016.

Meanwhile, Ryanair was a little firmer after it said traffic in March was up 10% to 9.4m customers, but the load factor was unchanged at 94%.

Royal Bank of Scotland Group was down after European Commission regulators said they had launched an in-depth probe into the decision to allow it off from divesting its Williams & Glyn business.

Morrisons was trading lower despite the release of data from Kantar Worldpanel, which showed the supermarket was the only one of the 'big four' to grow sales over the past 12 weeks.

Online fashion retailer ASOS retreated despite lifting its full-year revenue forecasts following a strong first half, with analysts pointing to a weaker-than-expected gross margin.

Tile specialist Topps Tiles was sharply lower after it reported a drop in sales as it pointed to a slowdown in the home improvement market.

South African focused Old Mutual, Mediclinic and Investec were under pressure as the rand slumped overnight after Standard & Poor's cut the nation's sovereign credit rating to 'junk'. Mediclinic was also dragged lower by a downgrade from Macquarie.

BP was boosted by an upgrade to 'buy' at Deutsche Bank, while Weir Group gained after Citi started the stock at 'buy' and Rotork surged as JP Morgan Cazenove lifted its to 'overweight'.

Berendsen and Rentokil were both in the black as Exane BNP Paribas initiated coverage of the stocks at 'outperform'.

Market Movers

FTSE 100 (UKX) 7,308.17 0.35%
FTSE 250 (MCX) 19,001.25 0.25%
techMARK (TASX) 3,430.48 0.36%

FTSE 100 - Risers

Fresnillo (FRES) 1,589.00p 2.38%
Randgold Resources Ltd. (RRS) 7,175.00p 1.99%
BHP Billiton (BLT) 1,250.00p 1.79%
Rio Tinto (RIO) 3,243.50p 1.79%
Bunzl (BNZL) 2,342.00p 1.78%
WPP (WPP) 1,761.00p 1.67%
Rentokil Initial (RTO) 250.20p 1.58%
Intertek Group (ITRK) 3,990.00p 1.50%
3i Group (III) 747.00p 1.43%
Glencore (GLEN) 318.00p 1.40%

FTSE 100 - Fallers

Mediclinic International (MDC) 694.00p -2.32%
Sainsbury (J) (SBRY) 257.60p -2.13%
Associated British Foods (ABF) 2,554.00p -1.81%
GKN (GKN) 358.40p -1.27%
Morrison (Wm) Supermarkets (MRW) 235.10p -1.09%
Old Mutual (OML) 196.50p -1.01%
Barclays (BARC) 219.25p -0.99%
Royal Bank of Scotland Group (RBS) 237.90p -0.83%
Kingfisher (KGF) 319.80p -0.68%
easyJet (EZJ) 1,012.00p -0.49%

FTSE 250 - Risers

Sophos Group (SOPH) 306.20p 12.53%
NMC Health (NMC) 1,815.00p 4.07%
Berendsen (BRSN) 769.50p 3.85%
Rotork (ROR) 255.50p 3.78%
BGEO Group (BGEO) 3,328.00p 2.94%
Cineworld Group (CINE) 671.50p 2.21%
Ashmore Group (ASHM) 360.80p 2.15%
Aberdeen Asset Management (ADN) 268.40p 2.05%
Clarkson (CKN) 2,668.00p 2.03%
Centamin (DI) (CEY) 177.30p 1.84%

FTSE 250 - Fallers

Allied Minds (ALM) 258.60p -4.36%
Henderson Group (HGG) 230.10p -2.50%
Millennium & Copthorne Hotels (MLC) 440.70p -2.13%
Travis Perkins (TPK) 1,473.00p -1.80%
Dunelm Group (DNLM) 626.00p -1.65%
UDG Healthcare Public Limited Company (UDG) 693.00p -1.63%
Kier Group (KIE) 1,351.00p -1.60%
Carillion (CLLN) 221.30p -1.51%
Sports Direct International (SPD) 300.40p -1.48%
Computacenter (CCC) 739.00p -1.47%