London midday: Stocks rise as investors ignore lacklustre data

The FTSE climbed on Friday as investors shrugged off disappointing UK construction data.

UK construction output fell 0.9% in June from May, more or less in line with consensus expectations for a 1% drop, according to the Office for National Statistics.

Compared to June 2015, construction output was down 2.2%, which was a touch steeper than the 2.1% drop forecast by economists and worse than the 1.6% decline the month before.

The data came during a period of uncertainty leading up to the UK’s vote to leave the European Union on 24 June.

Pantheon Macroeconomics said: “June’s official data confirm that the construction sector re-entered recession in the first half of this year, as public sector cuts and Brexit risk took their toll.

“The downturn looks set to deepen in the third quarter; July’s construction PMI broadly is consistent with output falling by about 3.5% quarter-on-quarter. Meanwhile, Brexit negotiations will be protracted, so businesses will hold off committing to major capital expenditure for a long time to come.”

Elsewhere, Eurozone gross domestic product rose by 0.3% in the second quarter, confirming preliminary estimates and in line with economists’ forecasts, according to data released by Eurostat.

Compared with the same quarter last year, seasonally-adjusted GDP was up 1.6%, also as expected.

Dennis de Jong, managing director at UFX.com, said: “While the eurozone may have grown during the second quarter, a sharp drop from the first three months of the year reflects the uncertainty that gripped Europe ahead of June’s Brexit vote.”

Eurozone industrial production rose 0.6% in June from May, versus expectations for a 0.5% increase, separate Eurostat data showed. On the year, industrial production for the euro bloc was up 0.4%, missing expectations of a 0.7% increase.

Data out earlier on Chinese industrial output and retail sales for July came in below expectations, although Asian markets seemed to ignore the figures with equities closing higher.

The rate of growth in fixed asset investment year-to-date slowed to a 8.0% year-on-year clip versus expectations of 8.9%.

That might be indicative of investment slowing in July by the most in over 20 years, Julian Evans-Pritchard, China economist at Capital Economics said in a research note.

"A further sharp slowdown in investment growth means that unless the government steps up policy support, it is only a matter of time before the economy begins to slow again," Evans-Pritchard said.

Industrial production in China slowed to a 6.0% year-on-year pace in July, compared to expectations of 6.2% and down from 6.2% in the month before.

Still to come, US retail sales data will be released by the Commerce Department at 1330 BST with analysts expecting a 0.4% increase in July. Business inventories and the University of Michigan’s consumer confidence index are also due at 1500 BST.

Company-wise, shares in The Restaurant Group gained after the pub and restaurant chain announced that after 15 years with the company, and two years as CEO, Danny Breithaupt will step down.

Coca-Cola continued to fizz higher a day after it posted an 11% jump in first-half operating profit and sounded an upbeat note on the full-year outlook.

Going the other way, mining stocks were under the cosh on lacklustre China industrial data and a drop in metal prices. Fresnillo, Rio Tinto and Randgold Resources were in the red.

Market Movers

FTSE 100 (UKX) 6,919.92 0.08%
FTSE 250 (MCX) 17,938.08 0.73%
techMARK (TASX) 3,535.14 0.20%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 351.30p 2.87%
easyJet (EZJ) 1,088.00p 2.74%
Coca-Cola HBC AG (CDI) (CCH) 1,727.00p 2.74%
Whitbread (WTB) 4,045.00p 2.41%
Tesco (TSCO) 160.00p 2.20%
Sainsbury (J) (SBRY) 237.60p 2.11%
Dixons Carphone (DC.) 367.00p 2.06%
Next (NXT) 5,495.00p 2.04%
Travis Perkins (TPK) 1,555.00p 1.90%
Paddy Power Betfair (PPB) 9,470.00p 1.66%

FTSE 100 - Fallers

Rio Tinto (RIO) 2,415.50p -2.95%
Antofagasta (ANTO) 518.00p -2.63%
Anglo American (AAL) 862.80p -2.50%
Randgold Resources Ltd. (RRS) 8,450.00p -2.26%
Fresnillo (FRES) 1,932.00p -2.03%
Glencore (GLEN) 196.75p -1.63%
BHP Billiton (BLT) 1,040.50p -1.42%
3i Group (III) 634.00p -0.94%
Merlin Entertainments (MERL) 476.40p -0.81%
Informa (INF) 709.50p -0.77%

FTSE 250 - Risers

Restaurant Group (RTN) 424.70p 12.71%
Ibstock (IBST) 173.00p 7.79%
Pagegroup (PAGE) 371.60p 6.45%
Polypipe Group (PLP) 280.50p 5.33%
AO World (AO.) 155.30p 5.00%
Tullow Oil (TLW) 231.70p 4.70%
Mitchells & Butlers (MAB) 260.30p 4.54%
Sports Direct International (SPD) 309.20p 4.25%
Sophos Group (SOPH) 240.90p 4.15%
Debenhams (DEB) 59.10p 4.14%

FTSE 250 - Fallers

Genus (GNS) 1,734.00p -10.53%
Hochschild Mining (HOC) 293.50p -3.14%
Barr (A.G.) (BAG) 511.00p -2.94%
Lancashire Holdings Limited (LRE) 610.00p -2.09%
Beazley (BEZ) 395.90p -2.05%
Auto Trader Group (AUTO) 383.10p -1.97%
Ocado Group (OCDO) 296.00p -1.89%
Acacia Mining (ACA) 586.50p -1.84%
Evraz (EVR) 172.40p -1.49%
Indivior (INDV) 297.20p -1.33%