FTSE 250 movers: Synthomer gains on acquisition; Halfords and N Brown slump

London’s FTSE 250 index was down 0.1% to 16,875.75 at 1445 GMT as investors digested a survey on UK manufacturing showing continued weakness in the sector.

Halfords and N Brown were under the cosh after UBS downgraded its stance on both stocks as it took a more cautious view on the UK general retail sector over the next 12 months.

The bank said uncertainty over Brexit and wage inflation was compounded by FX issues and the increasing impact of Amazon on the sector.

“The most important transactional currency for UK general retail is the GBP/USD and, with a range of 1.55 to 1.25, we calculate that theoretical sector earnings impact for 2017 could be between +20% and -40% from current spot rates before any mitigation or price increase.

“History suggests a significant degree of mitigation is possible but, in our view, given the significantly net importing nature of UK retail, the uncertainty will weigh on valuation.”

UBS downgraded Halfords to ‘sell’ from ‘neutral’ and cut the price target to 330p from 365p. It lowered its view on N Brown to ‘neutral’ from ‘buy’ and trimmed the target to 360p from 380p.

Energy company Drax was in the red following a note from Citigroup. The bank, which maintained its ‘neutral’ stance on the stock, said the Drax share price appears to be following the oil price rather than gas or power prices.

“Better-than-expected achieved power prices for FY16 and expectation of oil/link to be maintained in the long term can just about justify the current valuation of Drax.

"However, further material upward movement of Drax shares without a corresponding move to the UK power and gas prices could leave the shares looking expensive.”

On the upside, specialty chemicals firm Synthomer racked up healthy gains after announcing the $226m (£156m) acquisition of Hexion Performance Adhesives & Coatings.

It said the purchase - to be funded through existing cash and additional credit facilities – will strengthen Synthomer's position in the performance adhesives and coatings market by adding Hexion's range of dispersions, additives, powder coatings and specialty monomers.

Risers

Allied Minds (ALM) 450.60p 8.50%
McCarthy & Stone (MCS) 250.10p 5.53%
Synthomer (SYNT) 343.00p 4.96%
Dechra Pharmaceuticals (DPH) 1,223.00p 3.21%
NCC Group (NCC) 253.00p 2.76%
Interserve (IRV) 459.30p 2.64%
Saga (SAGA) 185.30p 2.60%
Fidelity China Special Situations (FCSS) 130.80p 2.35%
Cable & Wireless Communications (CWC) 75.80p 2.29%
UK Commercial Property Trust (UKCM) 83.15p 2.09%

Fallers

Brown (N.) Group (BWNG) 341.70p -5.08%
Halfords Group (HFD) 404.00p -4.60%
Drax Group (DRX) 265.50p -3.98%
Polypipe Group (PLP) 337.80p -3.62%
Supergroup (SGP) 1,435.00p -3.24%
Mitie Group (MTO) 269.30p -3.23%
Meggitt (MGGT) 406.20p -2.73%
Grafton Group Units (GFTU) 713.00p -2.73%
Senior (SNR) 228.80p -2.64%
Bodycote (BOY) 605.00p -2.50%