London midday: Stocks maintain gains as Tory climbdown on social care hits pound

London stocks were holding onto gains by midday as the pound took a hit from domestic political turmoil after Prime Minister Theresa May was forced into a humiliating climbdown over her so-called 'dementia tax' manifesto policy less than a week after it was unveiled.

The FTSE 100 was up 0.4% to 7,501.65, while the pound was down 0.3% against the dollar at 1.2995 and 0.5% lower versus the euro at 1.1569. The currency was under pressure after Brexit Secretary David Davis said over the weekend that Britain would not engage in talks unless Brussels drops demands to charge €100bn to leave the EU. It was also hit by news that the Labour Party is closing in on the Tories in the polls.

The latest survey from Opinium Research showed Labour cutting the Conservatives’ lead to 13 points from 15 points a week earlier, while a YouGov survey in the Sunday Times put Labour nine points behind. This is the first time it has had a single-digit gap since September.

A weaker sterling tends to benefit the index, as around 70% of its constituents derive their earnings from overseas.

Meanwhile, oil prices were on the rise ahead of an OPEC meeting in Vienna on Thursday, after Saudi energy minister Khalid al-Falih said there was unanimous support from all the nations to extend the 18m barrel a day production agreed at an earlier meeting. West Texas Intermediate was up 1% to $51.17 a barrel and Brent crude was 0.9% higher at $54.09.

IG analyst Chris Beauchamp said: “The big event of the week will be the OPEC meeting in Vienna, and we have seen early strength in oil prices as a result. Still, there needs to be some sizeable production cuts coming down the line, both in size and length of time, to force a further rally in oil prices, which have already gained 16% from their low earlier this month.”

Investors were also likely to be keeping an eye on any headlines related to Trump’s inaugural trip abroad, after he signed a $110bn arms deal with Saudi Arabia.

Back in the UK, the latest survey from Rightmove showed house prices rose for the fifth month in a row in May. New homes coming onto the market were selling for an average 1.2% more than the month before, when there had been a 1.1% monthly rise but this was slower than the 1.3% and 2.0% in March and February.

In corporate news, AstraZeneca nudged up after announcing the sale of its European rights to a hypertension and angina treatment for a sum of $300m plus royalties and a percentage of sales.

Wood Group edged higher after saying it has signed a technical support services contract with Sakhalin Energy Investment Company, an operator of Sakhalin-2, one of the world’s largest integrated oil and gas projects, for an undisclosed sum.

RBS was in the black following news it has doubled its offer to disgruntled shareholders suing the bank over a 2008 rights issue only hours before a High Court case was due to start.

Shares in Vectura fell after the inhaler maker said it is due to present positive outcomes of its Phase I clinical study on its VR942 inhaled asthma treatment at the American Thoracic Society’s annual conference later on Monday.

Intertek was boosted by an upgrade to ‘buy’ at Kepler Cheuvreux and Cairn Energy was lifted by an upgrade to ‘outperform’ at Macquarie, but Micro Focus took a hit after Credit Suisse cut the stock to ‘underperform’.

Market Movers

FTSE 100 (UKX) 7,501.65 0.41%
FTSE 250 (MCX) 19,885.56 0.37%
techMARK (TASX) 3,602.36 0.31%

FTSE 100 - Risers

Intertek Group (ITRK) 4,259.00p 2.21%
Marks & Spencer Group (MKS) 391.70p 1.77%
Burberry Group (BRBY) 1,742.00p 1.63%
Convatec Group (CTEC) 304.70p 1.57%
Paddy Power Betfair (PPB) 8,505.00p 1.49%
Vodafone Group (VOD) 223.45p 1.43%
Rio Tinto (RIO) 3,209.00p 1.31%
Smurfit Kappa Group (SKG) 2,173.00p 1.21%
Centrica (CNA) 203.70p 1.19%
Merlin Entertainments (MERL) 520.00p 1.17%

FTSE 100 - Fallers

Micro Focus International (MCRO) 2,377.00p -3.84%
Worldpay Group (WPG) 312.10p -3.04%
Royal Mail (RMG) 425.00p -0.79%
Prudential (PRU) 1,743.00p -0.74%
Bunzl (BNZL) 2,441.00p -0.69%
DCC (DCC) 7,405.00p -0.60%
Aviva (AV.) 531.00p -0.56%
Hikma Pharmaceuticals (HIK) 1,728.00p -0.46%
Direct Line Insurance Group (DLG) 350.10p -0.45%
GKN (GKN) 351.90p -0.45%

FTSE 250 - Risers

Ferrexpo (FXPO) 170.20p 4.67%
BTG (BTG) 660.50p 3.69%
Cairn Energy (CNE) 218.80p 3.60%
Safestore Holdings (SAFE) 442.60p 2.83%
Kaz Minerals (KAZ) 509.00p 2.68%
Pets at Home Group (PETS) 164.90p 2.61%
Tullow Oil (TLW) 215.40p 2.33%
Hochschild Mining (HOC) 283.60p 2.09%
Serco Group (SRP) 121.20p 2.02%
Mitchells & Butlers (MAB) 245.60p 1.87%

FTSE 250 - Fallers

Paysafe Group (PAYS) 471.90p -2.34%
Millennium & Copthorne Hotels (MLC) 462.60p -1.95%
Thomas Cook Group (TCG) 90.95p -1.62%
Greencore Group (GNC) 228.00p -1.51%
Crest Nicholson Holdings (CRST) 619.50p -1.20%
Jardine Lloyd Thompson Group (JLT) 1,151.00p -1.12%
Just Eat (JE.) 601.00p -1.07%
CYBG (CYBG) 271.50p -1.06%
Virgin Money Holdings (UK) (VM.) 306.90p -1.00%
SSP Group (SSPG) 474.90p -0.92%