London close: Stocks drift lower ahead of BoE

The FTSE 100 was down 0.16% or 12.23 points to 7,411.43 , while the pound was up 0.3% against the dollar at 1.3239 but down by the same proportion versus the euro at 1.1158.

Data released on Wednesday showed UK construction activity fell to an 11-month low in July due to a softening of commercial building amid political and economic anxiety, while building material costs rose at the one of the fastest rates seen for six years.

Markit's UK construction purchasing managers' index fell to 51.9 from 54.8 the month before, when it was forecast to only ease to 54.0. With a score above 50 indicating growth, the survey implied pretty weak expansion of the construction sector.

Though the decline was only modest, the fall in levels of commercial work was at the fastest pace for a year, with a number of survey respondents cited delays in decision making by clients linked to worries about the economic outlook and heightened political uncertainty.

Residential building remained the strongest performing category of activity in July, though saw the slowest growth for three months, with only civil engineering seeing an upturn in output growth in July.

Supply chain pressures remained intense, reflecting low stocks among vendors, and materials prices continued to rise at pace.

Howard Archer, chief economic advisor to the EY ITEM Club, said: "This is a disappointing survey across the board, pointing to the construction sector being hit by increased client caution amid heightened economic and political uncertainties."

Acting as a backdrop, traders were waiting on the Bank of England's policy announcement and quarterly Inflation Report the next day.

In corporate news, Standard Chartered led the fallers despite reporting an 82% jump in first-half profit. Shares in the bank slumped as analysts were disappointed that the dividend was not reinstated.

AstraZeneca edged higher after its haematology arm announced that the US Food and Drug Administration has accepted and granted priority review for the new drug application for acalabrutinib. Moreover, Deutsche Bank lifted its target price for the drugmaker to 5,300p from 4,569p, saying the last month's failure of its Mystic trial "is no longer the disaster it once could have been" thanks to pipeline successes elsewhere.

Rio Tinto was in the red despite saying it would return $3bn of cash to shareholders for the first half of 2017, declaring an interim dividend of 110 cents per share as well as a share buy-back of $1bn by the end of 2017.

RSA Insurance was weaker as it reported a 15% rise in first-half group operating profit that beat expectations, but disappointed also on the dividend front.

FTSE 250 builders’ merchant Travis Perkins retreated after it posted a drop in first-half profits despite growing revenues, as it highlighted a challenging plumbing and heating market. Building products supplier CRH was down too.

Packaging group Smurfit Kappa was down as weak containerboard supply and rising costs hit earnings.

On the upside, BAE Systems dropped even after new chief executive Charles Woodburn presented a strong set of interim results, keeping the aerospace and defence group on an even keel and firing off a confident view on the outlook.

Funeral company Dignity nudged up after saying underlying first-half pre-tax profit was up 9%, while Babcock was on the front foot after RBC Capital Markets initiated coverage of the stock at 'outperform', with BAE's comments doing no harm either.

Bookmaker William Hill racked up strong gains despite reporting a drop in profit for the first half, as revenues came in better than expected and the company sounded a confident note on the full year.

Market Movers

FTSE 100 (UKX) 7,411.43 -0.16%
FTSE 250 (MCX) 19,841.41 -0.11%
techMARK (TASX) 3,443.57 -0.57%

FTSE 100 - Risers

Old Mutual (OML) 203.00p 2.84%
ITV (ITV) 175.80p 2.51%
Paddy Power Betfair (PPB) 7,875.00p 2.27%
Kingfisher (KGF) 302.30p 1.82%
Babcock International Group (BAB) 860.50p 1.71%
Tesco (TSCO) 178.20p 1.28%
Fresnillo (FRES) 1,513.00p 1.20%
Royal Dutch Shell 'B' (RDSB) 2,185.00p 1.16%
Royal Dutch Shell 'A' (RDSA) 2,158.50p 1.12%
Associated British Foods (ABF) 3,007.00p 1.11%

FTSE 100 - Fallers

Standard Chartered (STAN) 795.00p -6.05%
Rolls-Royce Holdings (RR.) 943.00p -3.68%
Rio Tinto (RIO) 3,403.00p -2.83%
Micro Focus International (MCRO) 2,180.00p -2.81%
BAE Systems (BA.) 590.50p -2.72%
Ashtead Group (AHT) 1,617.00p -2.59%
Smurfit Kappa Group (SKG) 2,258.00p -1.99%
Intertek Group (ITRK) 4,605.00p -1.92%
CRH (CRH) 2,625.00p -1.69%
Antofagasta (ANTO) 930.50p -1.43%

FTSE 250 - Risers

William Hill (WMH) 268.00p 6.10%
Hiscox Limited (DI) (HSX) 1,370.00p 4.26%
Fisher (James) & Sons (FSJ) 1,600.00p 3.96%
Card Factory (CARD) 322.10p 3.80%
B&M European Value Retail S.A. (DI) (BME) 372.30p 3.50%
Acacia Mining (ACA) 181.80p 3.47%
Pets at Home Group (PETS) 170.50p 3.14%
Thomas Cook Group (TCG) 112.70p 2.83%
Sports Direct International (SPD) 388.90p 2.53%
esure Group (ESUR) 293.90p 2.50%

FTSE 250 - Fallers

Auto Trader Group (AUTO) 364.80p -4.75%
Meggitt (MGGT) 488.00p -3.75%
Vedanta Resources (VED) 740.50p -3.20%
CYBG (CYBG) 283.20p -3.01%
Aggreko (AGK) 842.50p -2.99%
Indivior (INDV) 383.30p -2.96%
Ultra Electronics Holdings (ULE) 2,091.00p -2.61%
IMI (IMI) 1,183.00p -2.55%
Ibstock (IBST) 246.10p -2.53%
Rightmove (RMV) 4,094.00p -2.52%