London close: Footsie rises as Brexit vote gives pound cold feet

The FTSE 100 closed up exactly 40 points or 0.6% at 6,895.02, while the pound slid 0.8% against the dollar to 1.2759 but was only down 0.2% versus the euro at 1.1197.

Stocks had kicked the day off firmly in the green as investors welcomed China's plans to cut taxes on a larger scale to help support its slowing economy, boost spending and provide financing for private and small businesses.

However, during the middle of the session gains evaporated as the focus shifted to the Commons vote on May's Brexit plan, which is expected to result in a heavy defeat after the Prime Minister failed to shift the EU's position on the Irish backstop.

Market analyst Craig Erlam at Oanda said the key determinant in how financial markets will respond will be the margin of May's defeat.

"I think it's safe to say that a shock victory for May and her deal would be very positive for the pound, both because of the softer Brexit it would ensure and the uncertainty and risk of no deal Brexit that would be removed. The chances of that happening appear very slim though today.

"Ultimately, defeat today doesn't really matter and doesn't kill May's deal. Rather, it’s a box ticking process that puts in motion other options being considered, including a no confidence vote and second referendum. Only once these options have been exhausted will we get a real idea of whether May's deal will pass, but that will take time, which could mean an extension to exit date."

Chris Beauchamp at IG pointed to suggestions that the vote looks set to be the largest ever defeat in the Commons for a Prime Minister.

"Quite how this will move the process forward is still a mystery, but, given the tragi-comedic nature of the whole exercise, a futile gesture at this stage of proceedings seems entirely fitting. This deal is not supported by lawmakers, but at present neither is any other, including no deal. Thus a delay into the summer now seems like a very probable outcome to tonight’s vote," he said.

Mining stocks were one of the main driving forces for the FTSE on the back of the China stimulus, while oil companies were also adding their weight as crude prices picked up again. Brent crude was up 2% to just over $60 a barrel.

Elsewhere, Spirent Communications surged as the communications technology company said it expects to deliver a 30% year-on-year rise in adjusted operating profit to between $75m and $77m, exceeding market expectations.

Other tech companies, such as Ocado, Micro Focus and Sage were among the top risers in the FTSE 100 were caught up in a friendly upsurge from Wall Street, where the Nasdaq index was surging amid strong performances from the FAANG stocks, led by Netflix.

Tabletop gaming retailer Games Workshop announced a special dividend as it reported pre-tax profits up 7%, while recruiter Hays rallied as it reported 8% growth in second-quarter net fees.

On the downside, Persimmon subsided slightly as the housebuilder said it expected 2018 pre-tax profits to be modestly ahead of current market consensus, having benefited from new developments opened through the year. Peer Barratt was dragged down too.

Gaming stocks GVC Holdings, Paddy Power and 888 were all weaker after the US Department of Justice called for wider restrictions on all online gambling.

Provident Financial was the worst performer on the FTSE 250 as it warned that full-year profits would be towards the lower end of market expectations due to "modestly higher than expected" impairments.

Emerging-markets focused asset manager Ashmore was on the back foot as it said growth in assets under management slowed in the second quarter, as positive net inflows were counterbalanced by negative investment performance.

In broker note action, Weir was upgraded to 'buy' at Societe Generale, while Cairn Energy was cut to 'equalweight' at Morgan Stanley and Faroe Petroleum was downgraded to 'hold' at Jefferies.

IMI was downgraded to 'hold' at SocGen, while Sanne Group was initiated at 'overweight' by JPMorgan.

Market Movers

FTSE 100 (UKX) 6,895.02 0.58%
FTSE 250 (MCX) 18,429.77 0.07%
techMARK (TASX) 3,371.91 1.12%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 886.00p 2.62%
3i Group (III) 835.80p 2.55%
Ocado Group (OCDO) 896.00p 2.05%
Sage Group (SGE) 604.00p 2.03%
Land Securities Group (LAND) 866.80p 1.95%
InterContinental Hotels Group (IHG) 4,379.00p 1.86%
BAE Systems (BA.) 505.80p 1.85%
Micro Focus International (MCRO) 1,498.50p 1.83%
London Stock Exchange Group (LSE) 4,469.00p 1.80%
Admiral Group (ADM) 2,064.00p 1.78%

FTSE 100 - Fallers

GVC Holdings (GVC) 675.50p -2.81%
Barratt Developments (BDEV) 498.50p -1.83%
International Consolidated Airlines Group SA (CDI) (IAG) 595.20p -1.52%
Pearson (PSON) 976.60p -1.51%
Evraz (EVR) 477.10p -1.51%
Standard Life Aberdeen (SLA) 263.95p -1.42%
Schroders (SDR) 2,564.00p -1.31%
Persimmon (PSN) 2,201.00p -1.26%
Kingfisher (KGF) 221.30p -1.21%
Royal Bank of Scotland Group (RBS) 229.90p -1.12%

FTSE 250 - Risers

Spirent Communications (SPT) 142.60p 13.90%
Halfords Group (HFD) 230.40p 5.40%
Games Workshop Group (GAW) 3,285.00p 4.29%
Funding Circle Holdings (FCH) 320.00p 4.13%
Hays (HAS) 146.90p 3.74%
Dechra Pharmaceuticals (DPH) 2,428.00p 3.67%
Rank Group (RNK) 159.00p 3.11%
Domino's Pizza Group (DOM) 270.10p 2.81%
Ibstock (IBST) 231.60p 2.75%
Meggitt (MGGT) 501.00p 2.66%

FTSE 250 - Fallers

Provident Financial (PFG) 521.00p -19.47%
888 Holdings (888) 164.30p -7.54%
Capita (CPI) 112.40p -6.10%
Just Group (JUST) 94.00p -5.81%
Savills (SVS) 727.50p -4.77%
Amigo Holdings (AMGO) 259.45p -4.21%
Superdry (SDRY) 510.00p -3.77%
Sanne Group (SNN) 517.00p -3.36%
Centamin (DI) (CEY) 117.30p -3.34%
Mediclinic International (MDC) 314.10p -3.33%