London midday: Stocks, pound slip after disappointing retail sales

London stocks had slipped into the red by midday while the pound lost ground following the release of disappointing UK retail sales figures.

The FTSE 100 was down 0.1% to 7,108.98, while the pound was 0.1% weaker against the dollar at 1.2792.

UK retail sales fell in March to record their first quarterly decline since 2013 as the plunging pound sent shop prices soaring, which suggests the consumer spending slowdown is gathering pace and that the Bank of England may not raise interest rates for some time.

Retail sales dropped 1.8% month-on-month in March, worse than the 1.4% the previous month and much worse than the 0.5% fall the market expected.

March sales rose 1.7% on the same month last year, the Office for National Statistics reported, which was well short of the 3.7% year-on-year rise in February and the 3.3% consensus forecast.

For the first three months of the year, retail sales fell 1.4% compared with the first quarter last year, the third consecutive month this measure has declined.

Excluding automotive fuel, sales were down 1.5% m-o-m and up 1.7% year-on-year, again both much worse than predicted.

A cause of the slowdown is that the effects of sterling’s Brexit-related slump has lifted the retail sales deflator to 3.3% -- its equal-highest since 2012.

IG analyst Joshua Mahony said: “It is worthwhile noting that while the month-on-month retail sales figures are typically volatile, the annual figure highlights that we are seeing a consistent weakness in spending which will undermine UK retail businesses should it persist.”

Meanwhile, investors were also digesting events in Paris late on Thursday after a police officer was killed and two others injured in a shooting on the Champs-Élysées that was later claimed by so-called Islamic State. It transpired that the gunman – who was shot dead as he tried to flee the scene - had been under preliminary investigation for terrorism but had been let go due to a lack of evidence.

The shooting came just three days before the first round of presidential elections.

In corporate news, consumer products group Reckitt Benckiser declined after it reported flat sales for the first quarter.

Property developer Hammerson ticked lower as it secured a £360m loan at an initial margin of 90 basis points from a syndicate of fourteen banks in a bid to reduce its debt.

Restaurant Group was under pressure after its finance chief left following less than a year at the company.

On the upside, rail, telecoms and defence engineer WS Atkins rallied after agreeing late on Thursday to be taken over by Canada's SNC-Lavalin for £2.1bn.

Sports direct edged up after receiving approval to go ahead with the $101m acquisition of Bob’s Stores and Eastern Mountain Sports in the US.

Marks & Spencer was lifted as Barclays initiated coverage of the stock at ‘overweight’,while TalkTalk and Domino’s Pizza were boosted by upgrades from HSBC and Peel Hunt, respectively.

Market Movers

FTSE 100 (UKX) 7,108.98 -0.13%
FTSE 250 (MCX) 19,382.22 0.02%
techMARK (TASX) 3,410.94 -0.18%

FTSE 100 - Risers

Babcock International Group (BAB) 900.50p 2.33%
Antofagasta (ANTO) 840.00p 1.69%
Marks & Spencer Group (MKS) 359.40p 1.61%
Anglo American (AAL) 1,152.00p 1.36%
Mondi (MNDI) 1,960.00p 1.24%
3i Group (III) 782.00p 1.10%
Rio Tinto (RIO) 3,100.50p 1.06%
Admiral Group (ADM) 2,031.00p 1.04%
BHP Billiton (BLT) 1,215.00p 1.00%
Croda International (CRDA) 3,551.00p 0.97%

FTSE 100 - Fallers

Reckitt Benckiser Group (RB.) 7,163.00p -1.54%
Burberry Group (BRBY) 1,570.00p -1.38%
Rentokil Initial (RTO) 239.20p -1.32%
Micro Focus International (MCRO) 2,467.00p -1.24%
Centrica (CNA) 203.70p -1.21%
AstraZeneca (AZN) 4,539.00p -1.21%
Unilever (ULVR) 3,904.00p -1.16%
International Consolidated Airlines Group SA (CDI) (IAG) 539.50p -1.10%
Severn Trent (SVT) 2,315.00p -1.07%
Hikma Pharmaceuticals (HIK) 1,828.00p -0.92%

FTSE 250 - Risers

TalkTalk Telecom Group (TALK) 198.50p 5.03%
Atkins (WS) (ATK) 2,081.00p 4.99%
Hastings Group Holdings (HSTG) 290.90p 3.49%
Lancashire Holdings Limited (LRE) 707.00p 2.39%
Virgin Money Holdings (UK) (VM.) 309.50p 2.25%
Ferrexpo (FXPO) 150.70p 2.17%
BGEO Group (BGEO) 3,509.00p 1.74%
Aldermore Group (ALD) 234.80p 1.60%
esure Group (ESUR) 243.40p 1.59%
Bovis Homes Group (BVS) 930.00p 1.58%

FTSE 250 - Fallers

Restaurant Group (RTN) 356.10p -2.55%
Allied Minds (ALM) 160.70p -2.43%
Essentra (ESNT) 520.50p -2.25%
Nostrum Oil & Gas (NOG) 459.10p -2.11%
Sanne Group (SNN) 674.50p -2.10%
Cairn Energy (CNE) 197.00p -2.04%
Sports Direct International (SPD) 308.60p -2.03%
IP Group (IPO) 137.20p -1.79%
Go-Ahead Group (GOG) 1,751.00p -1.74%
SSP Group (SSPG) 432.50p -1.70%