London midday: Stocks rise as investors shrug off bigger UK deficit

London stocks rose on Friday as oil prices recovered and as investors shrugged off weak data on Britain’s public finances.

Oil prices gained as Russia reiterated its commitment to joining a producers' output freeze with Brent crude up 0.63% to $51.71 per barrel and West Texas Intermediate up 0.45% to $50.86 per barrel at 1203 BST. Prices were under pressure in the previous session as the dollar strengthened.

Britain’s public finances showed a bigger-than-expected deficit in September of £10bn, up 14.5% from the deficit in the same month a year ago, the Office for National Statistics revealed. Economists had expected a deficit of £8.5bn. The data comes ahead of Chancellor Philip Hammond’s Autumn Statement next month.

“September’s public finances figures set the tone for a fairly disappointing set of fiscal forecasts likely to be revealed in the Autumn Statement next month,” according to Capital Economics.

“But this won’t prevent the Chancellor from scaling back the pace of austerity.”

Meanwhile, markets continued to digest European Central Bank chief Mario Draghi’s comments on Thursday. At a press conference after the ECB decided to keep policy unchanged, Draghi hinted that quantitative easing won’t be ended abruptly but stopped short of saying whether it would be extended or wound down.

“Although interest rates and the current €80 billion bond buying were left unchanged, markets were injected with volatility after Draghi stated that there were no discussions of extending the current Quantitative easing program beyond March 2017,” said FXTM Research analyst Lukman Otunuga

“With Draghi signalling that December will be key to take action, this almost mirrors the views of the Fed and reinforces the theme of central bank caution. Euro sensitivity may intensify in the coming weeks as investors re-evaluate the steps taken by the ECB in pending December meeting.”

On the company front, shares of British American Tobacco rallied following news of its takeover offer for Reynolds American.

Tobacco industry peer Imperial Brands was also higher.

Intercontinental Hotel Group slumped after reporting a fall in revenues in the third quarter, affected by volatility in foreign exchange markets.

Acacia Mining jumped after swinging to a pre-tax profit for the third quarter and saying full year gold production is expected to be about 5% higher than the top end of its previous guidance.

Market Movers

FTSE 100 (UKX) 7,041.07 0.20%
FTSE 250 (MCX) 17,943.73 -0.01%
techMARK (TASX) 3,484.00 -0.14%

FTSE 100 - Risers

Burberry Group (BRBY) 1,514.00p 4.41%
British American Tobacco (BATS) 4,960.50p 3.28%
Imperial Brands (IMB) 3,965.50p 2.68%
Royal Bank of Scotland Group (RBS) 190.00p 1.99%
Rio Tinto (RIO) 2,662.00p 1.66%
Informa (INF) 678.00p 1.50%
Standard Life (SL.) 338.00p 1.20%
Anglo American (AAL) 1,076.50p 1.17%
St James's Place (STJ) 938.00p 1.13%
Standard Chartered (STAN) 706.00p 0.97%

FTSE 100 - Fallers

Direct Line Insurance Group (DLG) 346.70p -2.28%
Shire Plc (SHP) 5,045.00p -1.56%
InterContinental Hotels Group (IHG) 3,175.00p -1.55%
ITV (ITV) 170.70p -1.44%
Whitbread (WTB) 3,777.00p -1.28%
Hikma Pharmaceuticals (HIK) 1,938.00p -1.22%
Royal Mail (RMG) 491.30p -1.07%
Travis Perkins (TPK) 1,393.00p -1.07%
Johnson Matthey (JMAT) 3,470.00p -1.06%
Rolls-Royce Holdings (RR.) 758.50p -0.98%

FTSE 250 - Risers

Acacia Mining (ACA) 525.00p 11.89%
IP Group (IPO) 153.30p 9.19%
Keller Group (KLR) 670.00p 3.96%
Sophos Group (SOPH) 235.10p 2.48%
SSP Group (SSPG) 340.80p 2.28%
Petra Diamonds Ltd.(DI) (PDL) 135.40p 2.27%
Entertainment One Limited (ETO) 234.20p 2.18%
Atkins (WS) (ATK) 1,576.00p 2.14%
Computacenter (CCC) 745.00p 1.85%
Rathbone Brothers (RAT) 1,832.00p 1.83%

FTSE 250 - Fallers

Countrywide (CWD) 200.80p -3.65%
Grafton Group Units (GFTU) 492.50p -3.34%
Hunting (HTG) 542.00p -2.69%
JRP Group (JRP) 123.80p -2.60%
Senior (SNR) 172.80p -2.32%
Homeserve (HSV) 609.50p -2.01%
Crest Nicholson Holdings (CRST) 417.00p -1.93%
Britvic (BVIC) 558.50p -1.85%
Debenhams (DEB) 54.00p -1.64%
Aggreko (AGK) 844.50p -1.57%