London midday: Stocks rise as fourth quarter UK GDP beats forecasts

London stocks rose on Thursday after official data showed the UK economy grew more than expected in the fourth quarter.

At 1159 GMT, the FTSE 100 climbed 0.16% to 7,166.11 points.

The pound fell 0.18% against the dollar to $1.2611 as worries about US President Donald Trump’s protectionist policies weighed on the greenback. Sterling was up 0.03% versus the euro to €1.1758.

In a boost to UK equities, a preliminary estimate on fourth quarter gross domestic product from the Office for National Statistics showed 0.6% quarter-on-quarter growth, unchanged from the third quarter and ahead of expectations for a slowdown to 0.5%.

Compared to the same period a year earlier, GDP increased 2.2%, also in line with the previous quarter’s annual gain and compared to forecasts of 2.1%.

The fourth quarter figures mean GDP grew 2.0% in 2016, down fractionally from 2.2% in 2015.

“Today’s UK GDP figures showed that the economy has entered this year in a strong position,” according to Ruth Gregory, UK economist at Capital Economics.

“The 0.6% quarterly rise in GDP in the fourth quarter was above the consensus estimate of 0.5% and was the third 0.6% rise in a row, showing that growth has remained remarkably stable despite the Brexit vote.”

However, the economist said growth looks set to slow in 2017 as higher inflation, caused by a weaker post-Brexit pound, impacts household spending. Capital Economics expects GDP of 1.8% in 2017.

In other UK news, MPs will be given five days to debate the bill triggering Article 50, which begins the formal process of Brexit.

Meanwhile, Prime Minister Theresa May is set to meet with Trump in the US on Friday to discuss a potential trade deal once the UK leaves the European Union.

In company news, Unilever’s shares plunged after it posted lower-than-expected sales for the fourth-quarter.

Royal Bank of Scotland edged higher as it has confirmed it will take a further £3.1bn provisions to pay off a looming penalty in the US for its sale of residential mortgage-backed securities in the run up to the financial crisis. RBS said on Thursday that it has set aside a total of £6.7bn, which would reduce its tangible net asset value per share at 30 September 2016 by 27p to 311p.

Anglo American ticked up after it said production was higher in the fourth quarter, although copper output declined.

Diageo was in the black as it reported a 28% jump in first-half operating profit.

Costa Coffee and Premier Inn owner Whitbread slumped despite reporting that third quarter revenue rose and that it will meet full year expectations, as it remains on track with its three point plan to grow and innovate its UK businesses.

Equipment rental group Ashtead was a high riser on positive read-across from US peer United Rentals, whose fourth-quarter earnings on Wednesday beat analysts’ expectations.

Card Factory rallied as it said that it is confident of delivering full-year underlying pre-tax profit slightly ahead of analyst consensus as it reported a rise in sales for the 11 months to the end of December and announced the departure of its chief financial officer.

Market Movers

FTSE 100 (UKX) 7,176.00 0.16%
FTSE 250 (MCX) 18,151.65 0.10%
techMARK (TASX) 3,236.03 -0.01%

FTSE 100 - Risers

Royal Bank of Scotland Group (RBS) 238.90p 5.01%
Diageo (DGE) 2,236.00p 4.44%
Ashtead Group (AHT) 1,661.00p 4.20%
Hargreaves Lansdown (HL.) 1,359.00p 2.10%
Barclays (BARC) 235.45p 1.99%
Shire Plc (SHP) 4,476.00p 1.61%
Aviva (AV.) 485.60p 1.57%
RSA Insurance Group (RSA) 585.00p 1.47%
AstraZeneca (AZN) 4,324.00p 1.44%
Lloyds Banking Group (LLOY) 66.45p 1.39%

FTSE 100 - Fallers

Sage Group (SGE) 598.50p -5.52%
Whitbread (WTB) 3,864.00p -4.80%
Unilever (ULVR) 3,196.00p -4.55%
Smurfit Kappa Group (SKG) 2,092.00p -3.28%
Associated British Foods (ABF) 2,398.00p -2.64%
Fresnillo (FRES) 1,391.00p -2.04%
Randgold Resources Ltd. (RRS) 6,520.00p -1.66%
Compass Group (CPG) 1,379.00p -1.64%
Marks & Spencer Group (MKS) 337.70p -1.37%
Merlin Entertainments (MERL) 480.10p -1.19%

FTSE 250 - Risers

IMI (IMI) 1,170.00p 4.00%
Card Factory (CARD) 251.90p 3.24%
TP ICAP (TCAP) 453.70p 3.23%
Paysafe Group (PAYS) 385.40p 2.80%
Capital & Counties Properties (CAPC) 275.00p 2.38%
JRP Group (JRP) 145.20p 2.33%
Tullow Oil (TLW) 302.10p 2.16%
Aggreko (AGK) 1,070.00p 2.10%
Brewin Dolphin Holdings (BRW) 314.00p 2.05%
IP Group (IPO) 193.80p 2.00%

FTSE 250 - Fallers

Polymetal International (POLY) 886.50p -5.03%
Ferrexpo (FXPO) 141.70p -3.74%
Ted Baker (TED) 2,881.00p -3.52%
Halfords Group (HFD) 367.30p -2.83%
Vedanta Resources (VED) 1,039.00p -2.72%
CMC Markets (CMCX) 111.10p -2.54%
Ocado Group (OCDO) 244.10p -2.48%
Ladbrokes Coral Group (LCL) 120.90p -2.11%
Evraz (EVR) 223.60p -2.10%
Hochschild Mining (HOC) 233.70p -2.09%