London midday: Stocks fall further as pound rises, airlines eye price war

The FTSE 100 was down 1.02% to 7,376.85 at 12.25, the FTSE, the worst performing major index in Europe as the pound was up 0.3% against the dollar and 0.47% against the euro at 0.8933.

As well as the stronger pound, which hits the Footsie's large majority of overseas-focused companies, other factors weighing on the mood included the IMF cutting its forecast for UK gross domestic product growth to 1.7% from a previous estimate of 2% and trimming its US GDP estimate to 2.1% from 2.3%.

Oil was also in focus amid the meeting with Opec and non-Opec oil producers in St Petersburg as they plot their next move to address the global supply glut and its effect on oil prices.

Analyst Craig Erlam at Oanda said oil prices may remain volatile throughout the session as we possibly get more insight into whether deeper cuts could be on the cards.

There is no significant UK data due on Monday, with European manufacturing and services PMI surveys indicated a slight slowing in the strong growth of recent months.

Later on, US manufacturing and services PMI are scheduled for 14:45 BS, with both expected to tick higher, while existing home sales at 1500 BST expected to ease off slightly.

Among individual companies, sub-prime lender Provident Financial gave up all of last week's gains ahead of its publish interim results later this week that will be its first since last month’s profit warning. An article in the Times linked Provident's troubles to a wider sub-prime lending crisis, saying "it is hard to escape the impression that parts of the UK’s extend and pretend, live on the never-never credit system are starting to buckle".

EasyJet and British Airways owner IAG were among the big fallers as budget airline rival Ryanair warned on the tough pricing environment that will see average fares drop in the second half, even though the Irish carrier announced a huge jump in quarterly profits.

Non-life insurers Direct Line and Admiral were lower against a sector backdrop that included a report from the AA that car insurance premiums have risen nearly 20% in the past year to a 23-year high, with warnings of a possible rise in Insurance Premium Tax in this year Budget. Prices have been forced up due to government's steep hike in February of formula used to calculate personal injury compensation, more than doubling payouts for life-changing injuries. Cheap insurance policies are typically loss leading for insurers. Michael Lloyd, the AA’s insurance director, said: “I fear that the Chancellor may once again target IPT in the autumn Budget as a quick win to fill in some of the government’s financial potholes.”

Gold miner Acacia, already under pressure due to a long-running spat with the Tanzanian government, is now facing a lawsuit in the UK from relatives of people who died at one of its mines in the east African country. Acacia with compensation claims from a group being represented by law firm Deighton Pierce Glynn.

Reckitt Benckiser was down 2.5% as it reported results amid "tough" market conditions and slightly weaker profit margins from newly acquired baby food business Mead Johnson Nutrition. A 1% fall in like-for-like sales and market and a new £318m charge set against the spent drugs business Indivior, meant "the results and commentary are disappointing", according to analysts at Investecin our view, with increased risk to the bulls’ hopes of a quick pick up in performance at Reckitt.

Clothes retailer Next was down after analysts at RBC Capital Markets reduced their target price for the shares to 4,000p from 4,300p.

Randgold Resources was 1% in the red as it continued to ramp up production at its Tongon gold mine in Côte d'Ivoire, tracking towards its 2017 target of 285,000 ounces, the company reported on Monday morning.

B&M European Value Retail was up 5% on rumours in the papers that Walmart-owned Asda is eyeing up the discounter.

Meat products producer Cranswick was trotting higher as it churned out impressive revenue growth in the first quarter of the year and stated its confidence of hitting full year targets.

Real estate investment trust Tritax Big Box edged slightly higher as the warehouse investor said it had bought the freehold of the former Littlebrook Power Station site i east London for £65m, funded by equity.

Market Movers

FTSE 100 (UKX) 7,376.82 -1.02%
FTSE 250 (MCX) 19,553.78 -1.00%
techMARK (TASX) 3,492.47 -1.06%

FTSE 100 - Risers

Standard Chartered (STAN) 816.40p 0.43%
Rolls-Royce Holdings (RR.) 925.00p 0.27%
Paddy Power Betfair (PPB) 7,555.00p 0.20%
Micro Focus International (MCRO) 2,198.00p 0.18%
GKN (GKN) 326.90p 0.15%
HSBC Holdings (HSBA) 736.00p 0.05%
Morrison (Wm) Supermarkets (MRW) 249.50p 0.04%
Wolseley (WOS) 4,504.00p -0.04%
Barclays (BARC) 205.20p -0.07%
Anglo American (AAL) 1,089.50p -0.23%

FTSE 100 - Fallers

Provident Financial (PFG) 2,261.00p -4.52%
easyJet (EZJ) 1,264.00p -3.51%
International Consolidated Airlines Group SA (CDI) (IAG) 570.50p -3.22%
Next (NXT) 3,719.00p -2.90%
Admiral Group (ADM) 1,997.00p -2.87%
Direct Line Insurance Group (DLG) 366.90p -2.58%
St James's Place (STJ) 1,189.00p -2.46%
Reckitt Benckiser Group (RB.) 7,706.00p -2.13%
Smurfit Kappa Group (SKG) 2,268.00p -2.03%
Convatec Group (CTEC) 306.80p -2.01%

FTSE 250 - Risers

Carillion (CLLN) 63.25p 6.01%
Cranswick (CWK) 2,948.00p 3.52%
Ascential (ASCL) 346.70p 3.06%
B&M European Value Retail S.A. (DI) (BME) 350.60p 2.70%
Drax Group (DRX) 321.40p 1.84%
Spire Healthcare Group (SPI) 345.80p 1.32%
Ferrexpo (FXPO) 218.30p 1.06%
Essentra (ESNT) 559.50p 0.72%
Hochschild Mining (HOC) 284.80p 0.67%
TP ICAP (TCAP) 486.10p 0.62%

FTSE 250 - Fallers

Acacia Mining (ACA) 208.50p -10.28%
Petra Diamonds Ltd.(DI) (PDL) 99.50p -9.38%
Euromoney Institutional Investor (ERM) 1,042.00p -4.32%
Hikma Pharmaceuticals (HIK) 1,374.00p -3.45%
Fidessa Group (FDSA) 2,305.00p -3.23%
FDM Group (Holdings) (FDM) 763.50p -3.11%
IP Group (IPO) 139.40p -3.06%
Hays (HAS) 163.10p -2.51%
CLS Holdings (CLI) 204.80p -2.48%
Beazley (BEZ) 498.60p -2.45%