London midday: Stocks slightly lower as EU sets out negotiating position

London stocks were moderately lower by midday on Friday as traders scrutinised the guidelines for Brexit negotiations just released by the European Union, even as a final barrage of economic data in the US beckoned at the end of the first quarter.

As of 1137 GMT the FTSE 100 was down by 0.56% or 41.59 points at 7,327.96.

Mike van Dulken, head of research at Accendo Markets, summarised it thus: "global equities are under pressure into the weekend as investors take some risk off the table following a tricky March that closed the door on the best Q1 for equities in several years.

"This is especially noteworthy given the prevalence of political risk at the same time as global central bank policy continues to diverge."

Earlier on Friday morning, the President of the European Council, Donald Tusk, announced the EU was open to beginning trade talks with Britain on a free trade deal before the Brexit negotiations were completely wrapped-up, but with a caveat.

Westminster would need to be able to show that "sufficient progress" had been made on the so-called divorce proceedings.

Furthermore, and critically perhaps, Tusk appeared to indicate the UK would in effect only get one year to negotiate a trade deal.

Against that backdrop, market operators were very much tuned into the barrage of economic data set for release in the States, although month and quarter-end window dressing by fund managers might muddy the waters a bit, if they hadn't done so already.

Markets also appeared to brush off better-than-expected data out of Asian hegemon China overnight, in the form of strong readings (from government surveys) for both the country's manufacturing and non-manufacturing sectors in March.

The 'official' Chinese manufacturing sector PMI rose from 51.6 in February to 51.8 for March (consensus: 51.7) - a five-year high.

Meanwhile, the official non-manufacturing PMI advanced from 54.2 to 55.1.

Despite those solid prints, many industrial metals on the LME were giving back some of the previous session's gains.

Not to be missed in such a heavily data-laden session, home prices in the UK fell by 0.3% month-on-month in March according to figures from Nationwide (consensus: 0.5%), which pulled the year-on-year rate of gains down from 4.5% to 3.5%.

A key gauge of UK consumer confidence on the other hand was steady in March at a reading of -6.0.

That came alongside revised data from ONS showing that Britain's economy expanded a tad less quickly than initially expected in the fourth quarter, with growth in gross domestic product clocking in at 1.9% year-on-year, which was a smidgen below the 2.0% initially estimated.

There were also worrying signs from ONS for the UK economy as the key services sector declined in January and the savings ratio fell to the lowest on record, which is likely to hit national growth and keep interest rates at rock bottom for a while yet.

The index of services fell by 0.1% month-to-month in January, the Office for National Statistics revealed, when a 0.2% increase had been expected by the market after December's 0.2% rise.

January also saw industrial production drop 0.5% and construction output 0.2%, while business investment fell by 0.9%, indicating that Brexit risk has subdued corporate risk appetite.

And current account data revealed net trade made a massive 1.7pp contribution to GDP growth, although it was largely reflected a surge in exports of non-monetary gold, which had an offsetting downward impact on inventories.

US personal income, spending and inflation figured foremost on the global economic calendar for Friday afternoon, followed by the Chicago PMI at 1445 GMT and the results of the University of Michigan's consumer confidence survey at 1500 GMT.

Peppa Pig brings home the bacon, Old Mutual mauled by Zuma

Multinational media distribution company Entertainment One updated the market on its performance for the year to 31 March on Friday, with the board claiming “strong” growth in both reported revenue and underlying EBITDA for the year. The FTSE 250 firm also reported “strong” growth in its Television and Family segments, and an improved second half performance in Film.

Shares in South African insurer Old Mutual and banking group Investec dived after the country's president, Jacob Zuma, fired Finance Minister Pravin Gordhan in a midnight cabinet reshuffle last night, also sending the rand and government bonds tumbling.

Software firm Micro Focus International has launched a $5.5bn leveraged loan in relation to its proposed acquisition of Hewlett Packard Enterprise’s software business. Last September, Micro Focus agreed to buy HP's software business by way of a merger with a subsidiary of HP incorporated to hold the software business.

AstraZeneca said it had completed an agreement with TerSera Therapeutics for the commercial rights to its cancer treatment Zoladex in the US and Canada. Under the terms of the agreement, AstraZeneca has received a payment of $250m from TerSera. It will receive future sales-related income through milestones up to $70m, as well as recurring quarterly sales-based payments at "mid-teen percent of sales".

Smiths Group will be asked to let go of Morpho Detection LLC and Morpho Detection International in order to get the 'green light' from the US Department of Justice for its $710.0m purchase of French rival Safran's Morpho arm.

Shawbrook shares surged as its main private backer returned with formal takeover bid.

Market Movers

FTSE 100 (UKX) 7,331.37 -0.52%
FTSE 250 (MCX) 18,894.24 -0.62%
techMARK (TASX) 3,458.96 -0.35%

FTSE 100 - Risers

Direct Line Insurance Group (DLG) 351.20p 2.99%
Aviva (AV.) 536.00p 1.52%
easyJet (EZJ) 1,022.00p 1.49%
British Land Company (BLND) 601.00p 1.43%
Land Securities Group (LAND) 1,040.00p 1.27%
Intu Properties (INTU) 275.20p 1.21%
Marks & Spencer Group (MKS) 335.20p 1.15%
Next (NXT) 4,302.00p 0.99%
Kingfisher (KGF) 327.60p 0.80%
Imperial Brands (IMB) 3,869.00p 0.72%

FTSE 100 - Fallers

Old Mutual (OML) 198.40p -8.53%
Mediclinic International (MDC) 721.50p -4.94%
Anglo American (AAL) 1,220.00p -3.37%
Antofagasta (ANTO) 815.50p -2.92%
Fresnillo (FRES) 1,510.00p -2.89%
Rio Tinto (RIO) 3,213.50p -2.33%
BHP Billiton (BLT) 1,242.00p -2.24%
Glencore (GLEN) 311.10p -2.02%
Mondi (MNDI) 1,938.00p -1.97%
Morrison (Wm) Supermarkets (MRW) 238.70p -1.49%

FTSE 250 - Risers

Shawbrook Group (SHAW) 335.00p 10.09%
Serco Group (SRP) 116.10p 5.07%
Sports Direct International (SPD) 305.80p 3.73%
Entertainment One Limited (ETO) 239.40p 3.55%
Riverstone Energy Limited (RSE) 1,249.00p 3.22%
Card Factory (CARD) 281.90p 2.47%
Debenhams (DEB) 54.55p 1.49%
Grafton Group Units (GFTU) 717.50p 1.27%
Inmarsat (ISAT) 846.00p 1.26%
NMC Health (NMC) 1,776.00p 1.20%

FTSE 250 - Fallers

Investec (INVP) 546.00p -9.60%
RPC Group (RPC) 770.00p -5.06%
Evraz (EVR) 215.90p -4.60%
Allied Minds (ALM) 307.60p -4.35%
IP Group (IPO) 150.50p -3.22%
Kaz Minerals (KAZ) 450.50p -3.18%
Tullow Oil (TLW) 229.60p -3.12%
Ferrexpo (FXPO) 166.60p -2.91%
Clarkson (CKN) 2,643.00p -2.83%
IMI (IMI) 1,196.00p -2.61%