London midday: Equities dragged lower by travel and leisure stocks

A truck was driven into crowds celebrating Bastille Day in Nice, in what President Francois Hollande called an attack of "an undeniable terrorist nature". Shares in International Consolidated Airlines, TUI and easyJet fell on the news.

“The market’s kneejerk reaction to sell travel and leisure stocks in the wake of a terrorist event is unfortunately becoming something all-too-familiar,” said Jasper Lawler, market analyst at CMC Markets.

“Recent experience suggests the initial sell-off will be short-lived but the potential damage to traveller confidence is a clear negative for affected firms. This is especially true in France where there is already concern that the drop in Sterling will impact tourism from the UK.”

First Group’s cautious outlook added to worries in the travel sector after the transport operator said domestic uncertainty after the EU referendum. The company reported a 1.4% drop in first quarter revenue in constant currency, with revenue growth in First Student, First Transit and First Rail offset by decreases in First Bus and Greyhound.

On the upside, Chinese data came in better-than-expected, including economic growth figures. China’s gross domestic product growth of 6.7% was better than the 6.6% analysts had been expected and was in line with the previous quarter’s growth. The government is targeting an annual GDP between 6.5% and 7% for this year.

Retail sales in China rose 10.6% in June from a year ago, beating forecasts for a 9.9% increase. China industrial production data also exceeded estimates, rising 6.2% year-on-year in June against forecasts for a 6.0% gain.

Closer to home, construction output in the UK slumped in May ahead of the EU referendum, according to the latest figures from the Office for National Statistics.

Output fell by 2.1% in May from April, which was much steeper than the 1% decline expected by economists. Construction output had risen by 2.8% in April. The largest contribution to the May slide came from new private housing, while infrastructure was the only sector to show an increase in output, up 0.6%.

Eurozone inflation rose in line with expectations in June at an annualised 0.1%, compared to a 0.1% drop in May, Eurostat confirmed in its final estimate on Friday. The European Central Bank is targeting inflation of just below 2% and is under pressure to address a prolonged period of low consumer prices.

Meanwhile, concerns that the UK has no trade negotiators for its Brexit talks with the European Union weighed on sentiment.

Oliver Letwin, who was fired on Thursday from the cabinet by Prime Minister Theresa May, told BBC Radio 4 Today programme: “We do not have trade negotiators...Trade negotiators who are Brits at the moment are basically working for the EU."

On the corporate front, housebuilders rebounded including Persimmon and Barratt Developments.

William Hill shares fell after as Canaccord Genuity lowered its 2016 earnings guidance while reiterating a ‘hold’ rating and cutting its target price to 301p from 340p.

Asset manager Ashmore got a boost as Goldman Sachs upgraded its stance on the stock to ‘buy’ from ‘neutral’ and raised the price target to 420p from 310p.

Still to come, US inflation for June at 1330 BST, US retail sales at 1330 BST, industrial and manufacturing production at 1415 BST, University of Michigan’s consumer confidence index at 1500 BST and business inventories at 1500 BST.

Market Movers

FTSE 100 (UKX) 6,642.68 -0.18%
FTSE 250 (MCX) 16,637.13 -0.90%
techMARK (TASX) 3,293.12 0.04%

FTSE 100 - Risers

Persimmon (PSN) 1,573.00p 1.55%
GlaxoSmithKline (GSK) 1,650.50p 1.35%
Intertek Group (ITRK) 3,585.00p 1.19%
Johnson Matthey (JMAT) 3,136.00p 1.06%
Royal Bank of Scotland Group (RBS) 183.80p 0.88%
London Stock Exchange Group (LSE) 2,659.00p 0.80%
National Grid (NG.) 1,092.50p 0.69%
Smiths Group (SMIN) 1,221.00p 0.66%
Pearson (PSON) 959.50p 0.63%
Reckitt Benckiser Group (RB.) 7,475.00p 0.62%

FTSE 100 - Fallers

easyJet (EZJ) 1,130.00p -3.50%
Fresnillo (FRES) 1,852.00p -2.88%
Prudential (PRU) 1,271.00p -2.42%
Standard Chartered (STAN) 592.90p -2.40%
Admiral Group (ADM) 1,983.00p -2.27%
Randgold Resources Ltd. (RRS) 8,760.00p -2.01%
Direct Line Insurance Group (DLG) 338.80p -1.83%
Legal & General Group (LGEN) 186.60p -1.79%
Marks & Spencer Group (MKS) 324.60p -1.79%
Whitbread (WTB) 3,669.00p -1.77%

FTSE 250 - Risers

Marshalls (MSLH) 255.10p 2.82%
Ashmore Group (ASHM) 336.70p 2.62%
BTG (BTG) 661.50p 2.56%
NCC Group (NCC) 297.00p 2.41%
Paragon Group Of Companies (PAG) 266.00p 2.35%
TalkTalk Telecom Group (TALK) 220.80p 2.13%
Softcat (SCT) 317.40p 1.44%
Countryside Properties (CSP) 232.80p 1.22%
Allied Minds (ALM) 349.50p 1.13%
Pendragon (PDG) 33.39p 0.94%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 132.70p -4.94%
Thomas Cook Group (TCG) 63.90p -4.05%
Countrywide (CWD) 250.00p -3.81%
Polypipe Group (PLP) 226.80p -3.78%
Shawbrook Group (SHAW) 169.10p -3.76%
Paysafe Group (PAYS) 376.50p -3.66%
Hochschild Mining (HOC) 231.30p -3.58%
Sports Direct International (SPD) 255.70p -3.55%
Vedanta Resources (VED) 512.50p -3.39%
Investec (INVP) 445.90p -3.38%