London close: FTSE ends lower as OECD cuts UK economic forecast

The OECD downgraded its forecast for UK growth this year to 1.7%, from the 2.2% that it estimated in February, assuming Britain votes to remain in the European Union in the 23 June referendum.

The think tank warned that a vote to leave the EU would see the UK economy suffer a “large economic shock”. It said by 2020 gross domestic product could be 3% below the level it might be otherwise if it voted to remain in the EU.

In its wider assessment of the global economy the OECD said the recovery remains weak due to subdued trade and problems in emerging markets.

The OECD forecast global GDP growth of 3% in 2016, unchanged from last year, with "only a modest improvement foreseen in 2017".

Meanwhile, a poll on the EU referendum by The Times/YouGov showed that 41% support the Remain camp while 41% are in favour of leaving. It followed two polls by the Guardian/ICM on Tuesday showing the Leave camp was ahead.

The pound declined 0.52% to 1.4407 against the dollar following the latest poll.

Brexit concerns also pushed housebuilders into the red, including Taylor Wimpey, Persimmon and Barratt Developments.

In another hit to trading sentiment, oil prices dropped on the prospect of rising production from major Middle East exporters ahead of the Organization of the Petroleum Exporting Countries meeting on Thursday.

At 1653 BST, Brent crude fell 0.42% to $49.68 per barrel and West Texas Intermediate slid 0.51% to $48.85 per barrel.

Economic data

The Markit/CIPS UK manufacturing purchasing managers’ index came in a little better than expected for May.

The index pushed up to 50.1 from 49.4 in April, back above the 50 mark that separates contraction from expansion and ahead of economists’ expectations of a reading of 49.6.

The official China manufacturing PMI came in at 50.1 in May, unchanged from the previous month but slightly better than the reading of 50.0 economists were expecting

The official non-manufacturing PMI fell to 53.1 in May from 53.5 a month earlier.

Separately, the private Caixin China manufacturing PMI dropped to 49.2 in May from 49.4 in April, as expected, marking the 15th consecutive month of contraction. It was the lowest figure since February.

UK mortgage lending in April slowed to its lowest monthly level since August 2012, according to the latest figures from the Bank of England. Mortgage lending increased £281m compared with a £7.41bn rise in March, missing expectations of £3.8bn.

Nationwide data showed UK house price growth stagnated in May. Prices rose 0.2% on the month, in line with April’s increase and worse than forecasts for a 0.3% gain. Year-on-year house prices increased 4.7% in May, slowing from April’s 4.9% rise and missing estimates for a 4.8% climb.

Markit’s final US manufacturing PMI came in at 50.7 in May, up from the flash estimate of 50.5 but down from 50.8 in April and pointing to the weakest performance since September 2009.

ISM’s manufacturing index rose to 51.3 in May from 50.8, surprising analysts’ who had pencilled in a reading of 50.4.

US construction spending recorded its biggest decline in more than five years in April, the Commerce Department revealed. Construction spending fell 1.8% in April from a month ago, missing estimates for a 0.6% increase and following a 1.5% rise in March.

Companies

Halfords shares declined as the company revealed full year numbers were largely flat but ahead of market expectations.

Wolseley plunged as it reported its third quarter results and said recent revenue growth trends “have been weaker and we have continued to manage costs and productivity very carefully” amid a challenging market.

Tesco shares jumped as Kantar Woldpanel data for the 12 weeks to 22 May showed the supermarket’s market share rebound to 28.3% from 28.0% a month ago while its sales performance beat the UK’s three other major supermarkets in the Big Four.

Shire gained on the back of positive broker recommendations the week after its £22bn takeover of Baxalta was approved by shareholders.

Market Movers

FTSE 100 (UKX) 6,184.56 -0.74%
FTSE 250 (MCX) 17,046.04 -0.81%
techMARK (TASX) 3,109.11 -0.23%

FTSE 100 - Risers

Shire Plc (SHP) 4,380.00p 2.82%
Fresnillo (FRES) 1,032.00p 2.28%
Mediclinic International (MDC) 881.50p 1.73%
Pearson (PSON) 848.00p 1.13%
Tesco (TSCO) 166.95p 1.12%
Unilever (ULVR) 3,177.50p 1.00%
Relx plc (REL) 1,261.00p 0.88%
BAE Systems (BA.) 487.70p 0.85%
DCC (DCC) 6,340.00p 0.79%
Randgold Resources Ltd. (RRS) 5,845.00p 0.78%

FTSE 100 - Fallers

Wolseley (WOS) 3,828.00p -5.50%
Sainsbury (J) (SBRY) 256.90p -4.32%
Rio Tinto (RIO) 1,868.00p -3.84%
Taylor Wimpey (TW.) 197.70p -3.75%
Persimmon (PSN) 2,035.00p -3.19%
Barratt Developments (BDEV) 573.50p -3.13%
Antofagasta (ANTO) 415.70p -3.10%
Berkeley Group Holdings (The) (BKG) 3,180.00p -2.90%
Travis Perkins (TPK) 1,868.00p -2.86%
Royal Bank of Scotland Group (RBS) 239.60p -2.80%

FTSE 250 - Risers

Centamin (DI) (CEY) 98.85p 2.59%
Melrose Industries (MRO) 394.00p 2.52%
Euromoney Institutional Investor (ERM) 930.00p 2.20%
Berendsen (BRSN) 1,234.00p 2.15%
Polymetal International (POLY) 828.00p 2.10%
Evraz (EVR) 113.00p 1.80%
Clarkson (CKN) 2,294.00p 1.77%
Templeton Emerging Markets Inv Trust (TEM) 454.70p 1.72%
Polypipe Group (PLP) 323.70p 1.70%
Acacia Mining (ACA) 310.50p 1.64%

FTSE 250 - Fallers

Halfords Group (HFD) 408.30p -6.91%
Restaurant Group (RTN) 346.10p -5.49%
Thomas Cook Group (TCG) 73.00p -4.45%
LondonMetric Property (LMP) 157.20p -4.44%
Millennium & Copthorne Hotels (MLC) 419.50p -4.38%
Lookers (LOOK) 143.20p -4.34%
Debenhams (DEB) 70.80p -4.26%
Jimmy Choo (CHOO) 114.90p -4.25%
Entertainment One Limited (ETO) 178.00p -3.84%
Henderson Group (HGG) 257.90p -3.80%