London close: FTSE firmer as pound continues to slide

The FTSE 100 was up 0.38% to 7,313.51, while the pound was down 0.36% against the greenback at 1.3410, off earlier lows but with the dollar still underpinned by hawkish comments from Federal Reserve Chair Janet Yellen.

The top-flight index tends to benefit from a weaker pound, as around 70% of its constituents derive most of their earnings from overseas.

Stocks in Europe continued to stay upbeat with the DAX up 0.41% to 12,657.41, the CAC 40 0.25% firmer at 5,281.96 and the IBEX 35 gaining 1.75% to 10,368.90.

IG analyst Chris Beauchamp said: "UK shares are still hobbled by the lack of big-ticket news, but the FTSE 100 continues its slow but steady recovery from the lows of the month. Yellen’s hawkish tone last night has reinvigorated the banks, with financials as a whole buoyed by hopes of higher rates and higher income from loans as 2017 gives way to 2018."

Speaking at the National Association for Business Economics, she argued against waiting until inflation had returned to its 2.0% target before tightening policy. She also said that the Fed should be wary of moving too gradually.

Nevertheless, she admitted there was uncertainty on various fronts, including the strength of the jobs market, what was implied by the current level of inflation expectations and even the fundamental forces behind inflation.

Market participants were mulling over the latest survey from the CBI, which showed retail sales volumes bounced back this month are expected to continue growing but at a slower pace in October.

There was a two-year record balance of 42% of retailers reporting higher sales volumes in September compared with a year ago, which rebounded powerfully from the 10% fall in August and was well above expectations for a 5% balance.

Grocery and clothing were the main drivers of volume growth, while furniture and carpet retailers, specialist food and drink stores, and sellers of recreational goods seeing falling sales volumes.

The survey, which took in responses from 117 firms, of which 55 were retailers, found orders placed with suppliers also rose in the year to September, rebounding from a fall in the previous month.

Retailers expect continued growth in both sales and orders in the year to October, albeit at a slower pace, the CBI said.

Banks put in a solid performance amid expectations of higher interest rates, with Standard Chartered, Lloyds and RBS among the top gainers, although StanChart was also boosted by an upgrade to 'hold' from 'sell' at Investec.

Elsewhere, Carillion shares rocketed following a press report that a Middle Eastern suitor is waiting to see what the construction firm has to say in its update on Friday before it makes an offer for the group.

Grainger fell despite the residential landlord saying it delivered a strong second-half trading performance, while Inmarsat gained as it announced it will supply AirAsia Group with its next-generation GX Aviation in-flight broadband to more than 120 Airbus aircraft.

Education publisher Pearson was lifted by an upgrade to 'outperform' from 'underperform' at Exane BNP Paribas, while Virgin Money was up after KBW lifted the stock to 'outperform'.

Acacia Mining was given a leg up after JP Morgan Cazenove bumped its price target up to 230p from 200p but Dairy Crest was hit by a downgrade at Investec.

Entertainment One fell after saying its operating performance since March was on track with its full-year targets, despite revenues from the reshaped film business being lower than last year, while Halma edged lower despite saying it made “good progress” in line with board expectations in its scheduled trading update for the period from 2 April.

PZ Cussons slipped as it said it remains on track to deliver full-year growth in operating profits but sounded a cautious note by saying trading conditions in most markets remain tough and that it's become increasingly clear UK consumers are "shopping cautiously".

Diploma was on the back foot as it announced the retirement of chief executive Bruce Thompson after 21 years in the role.

Market Movers

FTSE 100 (UKX) 7,313.51 0.38%
FTSE 250 (MCX) 19,569.45 0.34%
techMARK (TASX) 3,444.53 0.07%

FTSE 100 - Risers

Pearson (PSON) 606.00p 3.86%
Royal Bank of Scotland Group (RBS) 270.80p 3.44%
Lloyds Banking Group (LLOY) 67.20p 3.40%
Prudential (PRU) 1,763.50p 2.74%
International Consolidated Airlines Group SA (CDI) (IAG) 599.00p 2.57%
Next (NXT) 5,260.00p 2.43%
Smurfit Kappa Group (SKG) 2,369.00p 2.29%
Taylor Wimpey (TW.) 190.10p 2.09%
St James's Place (STJ) 1,133.00p 2.07%
easyJet (EZJ) 1,223.00p 2.00%

FTSE 100 - Fallers

Randgold Resources Ltd. (RRS) 7,300.00p -2.34%
National Grid (NG.) 925.30p -1.90%
Fresnillo (FRES) 1,399.00p -1.62%
United Utilities Group (UU.) 840.50p -1.58%
SSE (SSE) 1,394.00p -1.55%
TUI AG Reg Shs (DI) (TUI) 1,265.00p -1.48%
Rolls-Royce Holdings (RR.) 861.50p -1.37%
Direct Line Insurance Group (DLG) 356.90p -1.22%
WPP (WPP) 1,382.00p -1.22%
Severn Trent (SVT) 2,158.00p -1.19%

FTSE 250 - Risers

AA (AA.) 166.10p 5.80%
Acacia Mining (ACA) 191.90p 5.44%
Virgin Money Holdings (UK) (VM.) 284.50p 5.37%
Dixons Carphone (DC.) 187.80p 4.74%
Ferrexpo (FXPO) 285.10p 3.86%
Supergroup (SGP) 1,657.00p 3.63%
Close Brothers Group (CBG) 1,464.00p 3.39%
Nostrum Oil & Gas (NOG) 394.80p 3.19%
Equiniti Group (EQN) 298.10p 3.11%
Grafton Group Units (GFTU) 823.50p 2.99%

FTSE 250 - Fallers

IP Group (IPO) 125.10p -5.16%
Hochschild Mining (HOC) 224.00p -4.08%
Card Factory (CARD) 279.10p -3.97%
Dairy Crest Group (DCG) 605.00p -3.20%
Thomas Cook Group (TCG) 113.80p -3.07%
Diploma (DPLM) 1,051.00p -2.87%
Drax Group (DRX) 300.80p -2.56%
Telecom Plus (TEP) 1,082.00p -2.26%
Daejan Holdings (DJAN) 5,850.00p -2.01%
Sirius Minerals (SXX) 25.50p -1.89%