London midday: Stocks maintain mild losses as investors mull construction data

London stocks are still in the red at midday as investors sift through a raft of corporate news and digest the latest reading on the UK construction sector.

The FTSE 100 was down 0.3% to 7,230.31, while the pound was off 0.1% against the dollar, but holding above the 1.29 level at 1.2921. Data released earlier showed growth in the UK construction sector unexpectedly picked up in April.

The Markit/CIPS UK construction purchasing managers' index rose to 53.1 from 52.2 in March, signalling the fastest rate of expansion so far this year. Economists had been expecting the index to tick down to 52.0.

Civil engineering was the best-performing sub-category, with the fastest rate of expansion since March last year, while residential building growth hit a four-month high, but commercial building work increased at a weaker pace than last March.

Pantheon Macroeconomics said growth in construction activity remained "extremely weak", despite the small rise in the construction PMI in April. "Although any PMI reading above 50.0 in theory signals expansion, it has had to exceed 53.0 in practice to be consistent with growth."

Howard Archer, chief UK and European economist at IHS Markit, pointed out that construction activity remained well below its peak levels, adding that "there was nothing like the pick-up in activity in April that was evident in the purchasing managers’ survey for the manufacturing sector (which showed activity spiking to a three-year high)".

Meanwhile, Brexit was very much on investors' minds following news that the UK's divorce bill could be as much as €100bn.

Although the net bill would be lower than €100bn once the UK's rebate was taken into consideration, the gross amount could be much more than the €60bn originally proposed by European Commission president Jean-Claude Juncker back in February, according to Financial Times.

The French election was also in focus as presidential front-runner Emmanuel Macron got set to go head to head with Marine Le Pen in a televised debate on Wednesday evening before Sunday's runoff vote.

After the UK close, at 1900 BST, attention will turn to the Fed's latest policy announcement. Although no change to interest rates was expected, investors were likely to eye the accompanying statement for any clues on the outlook for further rate hikes.

In corporate news, supermarket chain Sainsbury’s was under the cosh after it said full-year profit dropped 8.2%.

Sticking with supermarkets, data from Kanta Worldpanel revealed that shoppers spent £325m on Easter eggs over the last three months, helping the sector grow at its fastest rate for three and a half years, led by Morrisons.

Sales increased at all major grocers but the 'big four' grocers all lost market share as discounters continued their land grab.

Elsewhere, broadcaster ITV slipped as chief executive Adam Crozier stepped down from his role after seven years, with no direct replacement appointed yet.

Paddy Power Betfair fell back despite posting an 87% rise in first-quarter earnings as revenues were boosted by the weaker pound and favourable results at Cheltenham, while Galliford Try slumped as it took a £98m hit for legacy contract costs.

Halfords Group retreated as it lost another chief executive to a larger retailer, with Jill McDonald poached by Marks & Spencer to be managing director of its non-food business.

Gold miner Centamin lost its shine as it said first-quarter pre-tax profit fell 28%.

Utility infrastructure company Pennon was under pressure after the Greater Manchester Waste Disposal Authority confirmed that it was looking to exit its recycling and waste management contract with Viridor Laing.

Imagination Technologies, whose chips are used by Apple, was in the red after the US technology giant said late on Tuesday that it sold fewer iPhones in the second quarter compared to a year ago.

Imperial Brands reversed earlier gains as it rolled another fat dividend for the first half of the year as earnings came out ahead of expectations despite continued tobacco volumes declines and a major increase in investment .

Burberry nudged lower after RBC Capital Markets cut the stock to 'underperform', while Aggreko and Spirax Sarco were hit by downgrades at Morgan Stanley and UBS, respectively.

Going the other way, Direct Line pushed higher as it said business continued to motor ahead during the first quarter of the year, driven by strong demand for its own brand motor insurance, with the company reiterating its guidance for key metrics in fiscal year 2017.

Software company Sage Group was on the front foot as it reported a rise in first-half profit as subscriptions grew and it said it expects to exceed its full-year revenue guidance.

Outsourcer Mitie surged after saying it will write down its balance sheet by £40m to £50m following an accounting review.

Pub operator JD Wetherspoon was trading higher as it said third-quarter like-for-like sales rose 4%, up from 3.8% growth the same time a year ago.

InterContinental Hotels was lifted by an initiation at 'outperform' by Bernstein.

Market Movers

FTSE 100 (UKX) 7,230.31 -0.27%
FTSE 250 (MCX) 19,679.45 -0.64%
techMARK (TASX) 3,525.20 0.03%

FTSE 100 - Risers

Pearson (PSON) 659.00p 2.09%
Shire Plc (SHP) 4,738.00p 1.87%
Sage Group (SGE) 696.00p 1.83%
Direct Line Insurance Group (DLG) 361.40p 1.60%
Johnson Matthey (JMAT) 3,049.00p 1.36%
InterContinental Hotels Group (IHG) 4,166.00p 1.29%
Wolseley (WOS) 5,035.00p 1.06%
Micro Focus International (MCRO) 2,639.00p 1.03%
Vodafone Group (VOD) 203.60p 0.84%
Reckitt Benckiser Group (RB.) 7,180.00p 0.76%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 265.80p -4.90%
Antofagasta (ANTO) 780.50p -3.46%
BHP Billiton (BLT) 1,134.50p -2.99%
Convatec Group (CTEC) 298.60p -2.89%
Glencore (GLEN) 289.25p -2.89%
Anglo American (AAL) 1,048.00p -2.87%
Ashtead Group (AHT) 1,559.00p -2.68%
Rio Tinto (RIO) 2,975.00p -2.33%
Tesco (TSCO) 179.45p -1.94%
Paddy Power Betfair (PPB) 8,615.00p -1.82%

FTSE 250 - Risers

Mitie Group (MTO) 224.00p 5.96%
Wetherspoon (J.D.) (JDW) 1,047.00p 3.66%
Card Factory (CARD) 336.80p 1.60%
Inmarsat (ISAT) 836.00p 1.27%
Foreign and Colonial Inv Trust (FRCL) 572.50p 1.24%
AO World (AO.) 140.60p 1.22%
Entertainment One Limited (ETO) 249.00p 1.22%
Sports Direct International (SPD) 311.50p 1.01%
Cairn Energy (CNE) 190.00p 0.90%
IP Group (IPO) 138.50p 0.80%

FTSE 250 - Fallers

Galliford Try (GFRD) 1,329.00p -9.10%
Centamin (DI) (CEY) 165.20p -4.78%
Ferrexpo (FXPO) 150.90p -3.64%
Carillion (CLLN) 219.60p -3.60%
Aggreko (AGK) 845.50p -3.54%
Kaz Minerals (KAZ) 486.70p -3.34%
Allied Minds (ALM) 150.60p -3.21%
Halfords Group (HFD) 363.10p -3.12%
Polymetal International (POLY) 985.50p -2.71%
Pennon Group (PNN) 844.00p -2.43%