London midday: Stocks edge up as pound hit by Carney comments

The FTSE 100 -- which tends to benefit from a weaker sterling as 70% of its constituents derive their earnings from overseas -- was up 0.2% to 7,536.54 as the pound fell 0.6% against the euro to 1.1356 and 0.5% versus the dollar to 1.2670 after Carney said in his Mansion House speech that interest rates would remain at low levels for a while longer amid "mixed signals" from the UK economy.

Delivering his delayed Mansion House speech at a City of London breakfast, Carney said current economic conditions were not yet right to raise borrowing costs, with so much uncertainty around Brexit negotiations still swirling and wage growth so "anaemic". His argument against a rate hike any time soon comes less than a week after it emerged that three policy makers had voted in favour of an imminent move on rates.

Meanwhile, Chancellor Philip Hammond used his speech to reassure the city that he would try and press for a transitionary agreement keeping the UK in the customs union until new rules are implemented.

Oanda analyst Craig Erlam said: "Rising inflation is clearly a concern among certain policy makers, having risen to 2.9% last month which is well above the central banks 2% target, but Carney was keen to stress that other factors have to be considered.

"Prior to last week’s meeting, markets had not anticipated a rate hike until at least 2019, prompting the pound to rally after the announcement. While the move was quite sharp, it hasn’t developed into anything more which would suggest investors are very much on the same page as Carney who argued that against the backdrop of anaemic wage growth and mixed consumer activity and business investment, it would not be appropriate to raise rates. This may mean tolerating higher inflation in the short term but under the circumstances, I think this remains the most suitable and likely response."

Markets participants were also keeping an eye on Brexit negotiations after the UK agreed on day one to the EU's demand for a two-phased negotiation whereby the divorce will be settled before any future trade deal can be negotiated.

Brexit secretary David Davis had wanted the two strands of negotiations to be staged in parallel, but on Monday both sides agreed to set up working groups on EU citizens' rights and the size, the divorce bill and borders, but not trade. Davis backed down from his previously statement that the discussion on this timetable issue would be "the row of the summer".

In corporate news, Barclays edged lower after it and four former executives were charged by the Serious Fraud Office with conspiracy to commit fraud and the provision of unlawful financial assistance over the bank's emergency fundraising deal with Qatar at the height of the financial crisis.

Rio Tinto was also in the red after rebuffing a counter bid for its Australian thermal coal assets from Glencore and recommending that shareholders vote for a sale to Yancoal Australia.

Assura was weaker as it announced plans to place up to 164m new ordinary shares or around 9.9% of the company's existing issued share capital to fund its acquisition and development pipeline.

Tullow Oil leaked lower as it chief financial officer Ian Springett resigned from the board with immediate effect due to ill health, to be succeeded by Les Wood.

Tesco ticked down as a technical glitch caused just under 10% of its grocery home shopping orders to be cancelled, while Domino's Pizza shares were looking pretty unappetising after Investec started the stock at 'sell' highlighting a number of challenges.

IWG slumped after chief executive Mark Dixon sold £94.2m shares in the serviced office business.

On the upside, outsourcer Mitie gained ground after it secured a new contact with Home Group worth up to £168m, while retailer N Brown surged as it reported a near-6% jump in first-quarter group revenue.

Market Movers

FTSE 100 (UKX) 7,536.54 0.17%
FTSE 250 (MCX) 19,924.14 0.26%
techMARK (TASX) 3,629.03 0.57%

FTSE 100 - Risers

Persimmon (PSN) 2,326.00p 2.11%
Burberry Group (BRBY) 1,773.00p 1.78%
Carnival (CCL) 5,255.00p 1.74%
Paddy Power Betfair (PPB) 8,665.00p 1.64%
Direct Line Insurance Group (DLG) 372.10p 1.53%
Diageo (DGE) 2,410.50p 1.52%
Unilever (ULVR) 4,374.00p 1.46%
WPP (WPP) 1,700.00p 1.43%
Smurfit Kappa Group (SKG) 2,370.00p 1.41%
GKN (GKN) 350.70p 1.36%

FTSE 100 - Fallers

Antofagasta (ANTO) 770.00p -2.84%
Glencore (GLEN) 282.40p -1.93%
BHP Billiton (BLT) 1,156.50p -1.91%
Anglo American (AAL) 974.60p -1.18%
Rio Tinto (RIO) 3,053.50p -1.12%
Lloyds Banking Group (LLOY) 67.99p -1.03%
Royal Dutch Shell 'B' (RDSB) 2,153.50p -0.99%
Royal Dutch Shell 'A' (RDSA) 2,111.00p -0.92%
Severn Trent (SVT) 2,376.00p -0.83%
BP (BP.) 469.05p -0.76%

FTSE 250 - Risers

Syncona Limited NPV (SYNC) 160.00p 4.44%
Mitie Group (MTO) 309.60p 4.17%
Melrose Industries (MRO) 261.00p 2.80%
Serco Group (SRP) 121.10p 2.63%
Ocado Group (OCDO) 313.10p 2.19%
Aveva Group (AVV) 2,041.00p 2.15%
IG Group Holdings (IGG) 590.50p 1.99%
PZ Cussons (PZC) 355.40p 1.92%
Worldwide Healthcare Trust (WWH) 2,510.00p 1.91%
Dignity (DTY) 2,504.00p 1.87%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 295.90p -6.21%
IWG (IWG) 337.50p -6.12%
Assura (AGR) 61.00p -3.94%
Tullow Oil (TLW) 152.60p -3.60%
Ferrexpo (FXPO) 184.40p -3.30%
Weir Group (WEIR) 1,743.00p -2.52%
Hunting (HTG) 465.50p -2.43%
Kaz Minerals (KAZ) 481.40p -2.41%
Amec Foster Wheeler (AMFW) 475.60p -2.20%
OneSavings Bank (OSB) 391.30p -2.17%