London midday: Stocks sag following weakish employment data

Stocks in London drifted slightly lower as markets digested a weaker reading on the UK labour market while bond investors continued to focus on political developments in Washington.

At 1207 GMT, the FTSE 100 was down 0.50% or 34.28 points to 6,758.46. Meanwhile, oil prices retreated, with Brent crude 1.45% weaker at $46.28 per barrel.

In parallel, the yield on the benchmark 10-year gilt was up by five basis points at 1.43%, while the pound was again on the defensive against the greenback, trading 0.31% lower at 1.2420.

Britain's labour market cooled more than expected in September and October, although economists did not appear especially put off by the data.

Employment growth in the UK slowed sharply over the three months to September, rising by 49,000 versus August´s increase of 106,000 (consensus: 91,000).

The rate of unemployment on the other hand dipped from 4.9% to 4.8% (consensus: 4.9%), its lowest level since mid-2005, as the number of people out of work was cut by 52,000, the largest month-on-month since April 2014.

However, the claimant count jumped by 9,800 (consensus: 500) and average weekly earnings were ahead by only 2.3% year-on-year in the quarter ending in September (consensus: 2.5%).

"That said, there are reasons to think that the slowdown in spending growth ahead won’t be too severe, particularly as policy remains supportive. Indeed, interest rates look set to remain at rock-bottom for some time to come and we expect the Chancellor to do his bit in next week’s Autumn Statement to help households who are set to feel the pinch," said Ruth Gregory, UK economist at Capital Economics.

"The UK labour market continued to show resilience in September [...] Indeed, it is too early to see an impact from the leave vote at the EU referendum on the UK labour market, in our view. We expect the referendum outcome to push up unemployment only gradually, likely at the turn of the year, and subsequently prevent upward wage growth pressures from building, thus forcing households to be more prudent and reduce private consumption by end-2017," was the view from Barclays Research.

Regarding the newsflow from Capitol Hill, Jasper Lawler at CMC Markets said: "There has been a lot of hoo-hah over Donald Trump’s cabinet appointments as well as a staff reshuffle. Concern that a disorganised transition of power bodes badly once Trump is in the White House is understandable, though probably a little premature at this early stage."

In corporate news, housebuilder Barratt Developments ticked lower after saying in a trading update that sales in July had risen by 4.3% but cautioning that the housing market was becoming more challenging.

Peer British Land also nudged lower as it posted higher profits for the first half of the year but said it expects to proceed more cautiously in property development as it noted a change in the behaviour of property markets since the Brexit vote.

ICAP edged down after it reported a drop in first-half trading profit.

On the upside, insurer Prudential ticked higher after reporting a 19% jump in new business profit in the first nine months of the year and saying it plans to boost its dividend by 5% a year.

Rolls-Royce gained ground after saying its outlook for 2016 remained unchanged for revenue, profit and cash. The aerospace and defence company said it would benefit from weaker sterling and life cycle cost reductions which would more than offset higher engineering and programme costs in its civil aerospace unit.

Temporary power provider Aggreko advanced as it said it expects full-year 2016 results to be broadly in line with current market expectations, with pre-exceptional profit before tax of around £225m.

Severn Trent ticked up after it agreed to buy water service provider Dee Valley Group for about £78.5m.

Shares in Morrisons were a little firmer after the supermarket said it was launching a store pick service with Amazon for its online customers.

Cranswick was in the black as the FTSE 250 food producer announced the acquisition of Northern Irish pork processing business Dunbia Ballymena for an undisclosed sum.

Great Portland Estates was also on the front foot after completing the sale of 73/89 Oxford Street and 1 Dean Street in London to Norwegian sovereign wealth fund Norges Bank Real Estate Management for £276.5m.

Anglo American was stronger after Goldman Sachs upped to the stock to ‘buy’ from ‘sell’, while Electrocomponents surged after HSBC raised its rating on the stock to ‘buy’.

Market Movers

FTSE 100 (UKX) 6,761.88 -0.45%
FTSE 250 (MCX) 17,532.86 -0.23%
techMARK (TASX) 3,304.19 -0.16%

FTSE 100 - Risers

Relx plc (REL) 1,323.00p 2.24%
Johnson Matthey (JMAT) 3,365.00p 2.09%
Provident Financial (PFG) 2,883.00p 1.76%
3i Group (III) 630.00p 1.37%
WPP (WPP) 1,665.00p 1.34%
Experian (EXPN) 1,414.00p 1.29%
Prudential (PRU) 1,540.50p 1.15%
Severn Trent (SVT) 2,160.00p 0.98%
ITV (ITV) 166.40p 0.85%
Micro Focus International (MCRO) 2,008.00p 0.80%

FTSE 100 - Fallers

Barratt Developments (BDEV) 463.60p -4.00%
British Land Company (BLND) 585.00p -3.54%
Rolls-Royce Holdings (RR.) 734.00p -2.72%
Centrica (CNA) 199.80p -2.06%
easyJet (EZJ) 1,065.00p -2.02%
Burberry Group (BRBY) 1,385.00p -1.98%
Capita (CPI) 570.00p -1.89%
Fresnillo (FRES) 1,379.00p -1.85%
Travis Perkins (TPK) 1,391.00p -1.83%
CRH (CRH) 2,732.00p -1.76%

FTSE 250 - Risers

Vedanta Resources (VED) 797.00p 4.87%
B&M European Value Retail S.A. (DI) (BME) 255.70p 4.37%
Zoopla Property Group (ZPLA) 308.20p 3.15%
NMC Health (NMC) 1,368.00p 2.86%
CLS Holdings (CLI) 1,679.00p 2.69%
Petra Diamonds Ltd.(DI) (PDL) 152.40p 2.56%
Electrocomponents (ECM) 374.30p 2.55%
Ascential (ASCL) 286.20p 2.21%
Riverstone Energy Limited (RSE) 1,279.00p 2.16%
Polypipe Group (PLP) 291.10p 2.07%

FTSE 250 - Fallers

Euromoney Institutional Investor (ERM) 1,025.00p -6.56%
ICAP (IAP) 499.60p -6.18%
Mitie Group (MTO) 205.00p -6.09%
Ocado Group (OCDO) 270.00p -4.32%
Aggreko (AGK) 776.00p -3.24%
Allied Minds (ALM) 355.80p -3.10%
Berkeley Group Holdings (The) (BKG) 2,412.00p -2.82%
Card Factory (CARD) 242.50p -2.77%
Capital & Counties Properties (CAPC) 265.90p -2.60%
Bovis Homes Group (BVS) 797.00p -2.51%