London midday: Stocks turn lower as pound gains on ICM poll

London stocks had fallen into the red by midday as services data disappointed and the pound gained ground after the latest poll suggested the Tories have an 11-point lead over Labour ahead of Thursday's general election.

The FTSE 100 was down 0.3% to 7,525.80 and the FTSE 250 was down 0.4% at 19,915.84 just after noon.

Sterling was up 0.2% versus the dollar and 0.5% against the euro at 1.2908 and 1.1481, respectively, after the latest poll by ICM for The Guardian put the Tories 11 percentage points ahead of Labour. Although this is down from a 12-point lead in a poll published a week ago, it is still wider than in several other opinion polls and puts support for the Conservatives at 45%, with Labour at 34%.

Spreadex analyst Connor Campbell said: "Though YouGov’s most recent survey suggests that the Tories will fall 21 seats short of an overall majority, investors instead appeared to focus on the latest Guardian/ISM poll giving the Conservatives an 11 point lead over Labour."

The study by YouGov showed the Tories would win 305 seats, below the 326 needed to pass laws with a majority.

Meanwhile, investors in London were still digesting the tragic events over the weekend, which saw seven people killed and dozens injured in a terrorist attack at London Bridge and Borough Market.

On the data front, the latest survey from IHS Markit and CIPS revealed that activity in the UK services sector slowed more than expected in May.

The Markit/CIPS services purchasing managers' business activity index fell to 53.8 from the four-month peak of 55.8 in April, missing expectations for a reading of 55.0. Although the index was above the 50.0 mark that separates contraction from expansion, it signalled the slowest expansion of service sector output since February, mainly due to weaker new business growth.

Markit said the slowdown in new order growth was linked to squeezed household budgets and, in some cases, delayed decision-making among clients ahead of the general election.

Chris Williamson, chief business economist at IHS Markit, said: “Despite slower growth in May, the surveys indicate that the economy has regained some momentum in the second quarter. The three PMI surveys are running at levels that are historically consistent with GDP growing at a robust 0.5% rate, albeit with the slowing in May posing some downside risks to the near-term outlook.

Oil prices were in the red, reversing course after gaining earlier in the session on news that Saudi Arabia, Egypt, the UAE and Bahrain have cut diplomatic ties with Qatar, citing concerns about its terrorist links. West Texas Intermediate was down 0.3% to $47.51 a barrel and Brent crude was down 0.4% to $49.77.

In corporate news, Polymetal fell after announcing an agreement to extend its existing $400m credit facility with Sberbank for seven years, while BBA Aviation retreated as it said chief executive Simon Pryce has stepped down after 10 years at the aviation support services provider.

Vodafone turned lower after saying it and LG UPlus announced a new Partner Market agreement for South Korea where the former will share best practices with LG Uplus across all areas of their business, including network strategy and development.

Going the other way, Royal Mail was in the black as it agreed to sell two of the seven plots on the site of its former south London mail centre at Nine Elms site to US-based developer Greystar for £101m cash.

Ocado surged after it revealed on Sunday it had won a first overseas contract with an unnamed "regional European retailer".

Building materials distributor Wolseley was boosted by an upgrade to 'overweight' at JPMorgan, but Kaz Minerals and Antofagasta were hit by downgrades at HSBC.

Central and Eastern European-focused low-cost airline Wizz Air flew higher after reporting a 22% jump in passenger numbers in May, while AstraZeneca ticked up after releasing positive results from a trial of a breast cancer drug.

Market Movers

FTSE 100 (UKX) 7,525.80 -0.29%
FTSE 250 (MCX) 19,935.67 -0.34%
techMARK (TASX) 3,653.35 -0.35%

FTSE 100 - Risers

Old Mutual (OML) 201.60p 2.34%
Convatec Group (CTEC) 347.40p 1.40%
Royal Mail (RMG) 443.10p 0.91%
Marks & Spencer Group (MKS) 370.20p 0.68%
Royal Bank of Scotland Group (RBS) 260.10p 0.66%
Standard Chartered (STAN) 749.70p 0.63%
Tesco (TSCO) 183.45p 0.49%
National Grid (NG.) 1,038.50p 0.44%
Wolseley (WOS) 5,055.00p 0.40%
Severn Trent (SVT) 2,484.00p 0.36%

FTSE 100 - Fallers

Sage Group (SGE) 710.50p -2.54%
Antofagasta (ANTO) 786.50p -2.30%
easyJet (EZJ) 1,360.00p -2.09%
Merlin Entertainments (MERL) 527.00p -1.86%
Hargreaves Lansdown (HL.) 1,394.00p -1.55%
International Consolidated Airlines Group SA (CDI) (IAG) 598.50p -1.48%
BHP Billiton (BLT) 1,167.50p -1.48%
Glencore (GLEN) 282.60p -1.45%
Mediclinic International (MDC) 786.00p -1.44%
Johnson Matthey (JMAT) 3,103.00p -1.43%

FTSE 250 - Risers

Metro Bank (MTRO) 3,845.00p 3.22%
Greencore Group (GNC) 255.30p 2.78%
OneSavings Bank (OSB) 415.90p 2.59%
Ocado Group (OCDO) 322.80p 2.15%
IP Group (IPO) 139.50p 2.12%
Bovis Homes Group (BVS) 926.00p 2.04%
Worldwide Healthcare Trust (WWH) 2,459.00p 1.36%
Sports Direct International (SPD) 296.40p 1.19%
Rathbone Brothers (RAT) 2,679.00p 1.17%
McCarthy & Stone (MCS) 181.60p 1.17%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 474.50p -4.03%
Vedanta Resources (VED) 585.00p -3.62%
Hill & Smith Holdings (HILS) 1,433.00p -2.85%
Fidessa Group (FDSA) 2,421.00p -2.69%
Allied Minds (ALM) 142.00p -2.47%
Restaurant Group (RTN) 358.20p -2.10%
Ferrexpo (FXPO) 169.40p -2.08%
Ladbrokes Coral Group (LCL) 118.90p -2.06%
FirstGroup (FGP) 141.50p -2.01%
Softcat (SCT) 424.90p -2.01%