London close: Stocks dip as traders digest UK services data

The Markit/CIPS purchasing managers’ index on UK services rose to 52.9 in August from 47.4 in July, beating forecasts of 50.0. A reading above 50 signals an expansion while a level below that suggests a contraction.

The pound rose 0.17% against the dollar to $1.3316.

“While the incredible August recovery in the UK services PMI is likely to have significant implications for growth and prosperity, markets instead chose to reflect on the impact it will have upon the chances of further BoE action,” said IG market analyst Joshua Mahony.

“No doubt Mark Carney will be dreading Wednesday’s inflation report hearings, which is sure to see the governor grilled over whether it made sense to unleash a whole raft of new stimulus steps in the wake of very little evidence of a slowdown. It seems the implication of monetary easing may have been premature on this occasion, which if admitted by Carney would significantly lower the chance of another rate cut by year end.”

Meanwhile, oil prices rose on reports that Russia and Saudi Arabia had agreed to co-operate to stabilise prices. In a statement at the Group of 20 meeting in China, the oil producers said they would set up a working group to monitor the market and draft recommendations to ensure its stability.

Brent crude rose 1.07% to $47.34 per barrel and West Texas Intermediate increased 1.2% to $45.00 per barrel at 1630 BST.

Elsewhere, the Caixin/Markit China services PMI rose to 52.1 in August on a seasonally adjusted basis from 51.7 the previous month.

Caixin’s composite PMI, which combines services and manufacturing, fell slightly to 51.8 from 51.9 as it was dragged down by the struggling manufacturing sector.

In the Eurozone, Markit’s final composite PMI fell to 52.9 in August from 53.2 in July and was down a touch from the flash estimate of 53.3. The services PMI fell to 52.8 from July’s 52.9 and the flash estimate of 53.1.

Retail sales in the euro-area were up 1.1% on the month in July following a 0.1% drop in June. On the year, retail sales were up 2.9%. Analysts had expected a month-on-month rise of 0.5% and a year-on-year increase of 1.8%.

On the company front, Lloyds Banking Group and Royal Bank of Scotland were under the cosh as Deutsche Bank downgraded the stocks to adjust for a “lower-for-longer” interest rate environment.

On the upside, oil producers rallied as crude prices jumped with Royal Dutch Shell, BP and BHP Billiton in the black.

Randgold Resources gained after Numis upgraded the stock to ‘buy’ from ‘hold’, saying it expects the third quarter results to show operational improvements.

Morrisons was also sitting higher as it implemented a new round of 12% price cuts to 160 everyday items.

Zoopla got a boost as Barclays upgraded the stock to ‘overweight’ from ‘equalweight’ and lifted the price target to 335p from 250p ahead of the company´s next Investor Day on 15 September.

Dechra Pharmaceuticals advanced after it reported a jump in underlying profit for the year as revenue grew following a number of acquisitions.

Market Movers

FTSE 100 (UKX) 6,879.42 -0.22%
FTSE 250 (MCX) 18,025.97 0.05%
techMARK (TASX) 3,471.13 0.03%

FTSE 100 - Risers

CRH (CRH) 2,580.00p 1.69%
Randgold Resources Ltd. (RRS) 7,590.00p 1.67%
Paddy Power Betfair (PPB) 9,165.00p 1.66%
BAE Systems (BA.) 557.00p 1.64%
Royal Dutch Shell 'A' (RDSA) 1,896.50p 1.39%
Capita (CPI) 1,060.00p 1.34%
Royal Dutch Shell 'B' (RDSB) 1,976.00p 1.18%
Morrison (Wm) Supermarkets (MRW) 198.90p 0.96%
National Grid (NG.) 1,080.00p 0.89%
BP (BP.) 434.80p 0.88%

FTSE 100 - Fallers

Royal Bank of Scotland Group (RBS) 196.50p -3.82%
Provident Financial (PFG) 3,025.00p -2.42%
Intu Properties (INTU) 305.40p -2.24%
Berkeley Group Holdings (The) (BKG) 2,690.00p -2.15%
Lloyds Banking Group (LLOY) 59.65p -2.13%
Imperial Brands (IMB) 4,054.00p -1.84%
Coca-Cola HBC AG (CDI) (CCH) 1,666.00p -1.71%
Worldpay Group (WI) (WPG) 293.20p -1.68%
Taylor Wimpey (TW.) 161.80p -1.46%
Standard Life (SL.) 368.00p -1.45%

FTSE 250 - Risers

Zoopla Property Group (WI) (ZPLA) 330.00p 7.84%
Dechra Pharmaceuticals (DPH) 1,400.00p 7.69%
Carillion (CLLN) 270.00p 3.41%
Cobham (COB) 169.70p 3.10%
Acacia Mining (ACA) 498.70p 3.04%
Tullow Oil (TLW) 232.60p 2.78%
JRP Group (JRP) 97.05p 2.64%
Kaz Minerals (KAZ) 182.80p 2.64%
Evraz (EVR) 131.10p 2.50%
Hays (HAS) 133.10p 2.46%

FTSE 250 - Fallers

Virgin Money Holdings (UK) (VM.) 304.60p -4.09%
Redefine International (RDI) 42.10p -3.31%
Ibstock (IBST) 168.00p -3.17%
Hastings Group Holdings (HSTG) 220.20p -2.74%
Tritax Big Box Reit (BBOX) 144.20p -2.63%
Shawbrook Group (SHAW) 230.00p -2.62%
IP Group (IPO) 192.40p -2.53%
Cranswick (CWK) 2,297.00p -2.34%
Countryside Properties (CSP) 236.70p -2.27%
CLS Holdings (CLI) 1,530.00p -2.05%