London midday: Stocks maintain gains as investors digest GDP data

The FTSE 100 was up 0.5% at 7,104.40, while sterling was off 0.1% against the dollar and the euro at 1.2928 and 1.1425, respectively, off earlier lows but still in the red as figures from the Office for National Statistics showed the UK economy slowed sharply at the end of last year, defying analyst expectations and weighing heavily on annual GDP growth.

Economic growth slowed to just 0.2% in the last three months of the year, below consensus forecasts of around 0.3% and down on the 0.6% seen in the three months to September. In December, GDP fell 0.4%, against analyst expectations for either little or no growth.

As a result, annual GDP growth was just 1.4%, the lowest since 2012.

Rob Kent-Smith, head of GDP at the ONS, said: "GDP slowed in the last three months of the year, with the manufacturing of cars and steel products seeing steep falls, and construction also declining. However, services continued to growth with the health sector, management consultants and IT all doing well."

Services output increased 0.4% in the fourth quarter. Professional, scientific and technical activities made the largest contribution, with 0.15 percentage points, while wholesale, retail and the motor trade provided the biggest drag, contributing -0.11 percentage points.

Production fell 1.1% in the quarter, which the ONS said was due mainly to a fall of 0.9% in manufacturing; it is the first time since early 2009 that all four sectors have fallen during a quarter.

Construction was down 0.3% compared to an increase of 2.1% in the third quarter.

"All in all, today’s data bring clear signs that Brexit uncertainty is depressing the economy, but we would not rush to conclude yet that GDP is on track to fall outright in Q1," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. "Solid growth in households’ spending, thanks to low inflation and robust labour income growth, should keep GDP on a slightly rising path."

Meanwhile, in Brexit news, Downing Street confirmed that the parliamentary vote on Theresa May's deal that was scheduled for Valentine's Day will not be taking place this week.

A spokesman said the government will bring a vote on the Brexit deal to parliament as soon as possible.

"We have committed that if the meaningful vote has not been passed by February 27 to a further amendable motion by that date," he said, adding that May will make a statement to Commons on Tuesday.

This comes as the Prime Minister seeks more time to discuss Labour's Brexit proposal and hold more talks with Brussels.

More broadly, Sino-US relations remained in focus as discussions between the two nations are due to continue this week, with US Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer off to Beijing for the next stage of talks.

On the corporate front, travel operator Tui racked up strong gains following heavy losses last week on the back of a profit warning.

Just Eat rallied as it emerged that shareholder Cat Rock Capital Management has sent an open letter to the food delivery group urging it to merge with a "well-run industry peer" following the departure of chief executive Peter Plumb. In the letter, Cat Rock expressed "deep concern" over the company's recent appointment of executives, saying they lack online food delivery experience.

Acacia Mining shone as the gold miner said it swung to a profit in 2018, while tobacco company Imperial Brands was up following a report that chairman Mark Williamson will confirm soon that he is resigning in the coming months.

Smith & Nephew was the worst performer on the FTSE 100 following a report late on Friday that it is in discussions to buy US medical equipment company NuVasive for more than $3bn.

In broker notes, RBS was hit by a downgrade to 'equalweight' from 'overweight' at Morgan Stanley, but Lloyds gained as it was lifted to 'overweight' from 'equalweight'.

Playtech dropped on the back of a downgrade to 'underperform' at Bank of America Merrill Lynch and TalkTalk was knocked lower by a downgrade to 'reduce' from 'hold' at HSBC.

Metro Bank was boosted by an upgrade to 'hold' from 'sell' at Berenberg.

Liberum downgraded Barratt Developments and Bovis Homes to 'hold' as it took a look at UK housebuilders.

Market Movers

FTSE 100 (UKX) 7,104.40 0.47%
FTSE 250 (MCX) 18,732.64 0.43%
techMARK (TASX) 3,442.07 0.03%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 948.40p 3.83%
British American Tobacco (BATS) 2,753.50p 2.40%
Smurfit Kappa Group (SKG) 2,196.00p 2.23%
Evraz (EVR) 528.09p 2.03%
WPP (WPP) 818.80p 1.99%
Hargreaves Lansdown (HL.) 1,661.50p 1.71%
Scottish Mortgage Inv Trust (SMT) 490.10p 1.52%
Mondi (MNDI) 1,830.50p 1.50%
Prudential (PRU) 1,499.00p 1.42%
Ocado Group (OCDO) 917.20p 1.42%

FTSE 100 - Fallers

Smith & Nephew (SN.) 1,447.00p -4.49%
Direct Line Insurance Group (DLG) 334.50p -2.56%
Antofagasta (ANTO) 854.80p -1.90%
Royal Bank of Scotland Group (RBS) 234.60p -1.88%
Admiral Group (ADM) 2,105.00p -1.64%
GlaxoSmithKline (GSK) 1,551.20p -0.87%
Melrose Industries (MRO) 155.60p -0.73%
AstraZeneca (AZN) 5,661.00p -0.61%
Compass Group (CPG) 1,738.50p -0.60%
Paddy Power Betfair (PPB) 6,340.00p -0.55%

FTSE 250 - Risers

Contour Global (GLO) 172.80p 8.61%
TBC Bank Group (TBCG) 1,444.00p 2.56%
BCA Marketplace (BCA) 206.50p 2.48%
Clarkson (CKN) 2,490.00p 2.26%
Ted Baker (TED) 1,858.00p 2.09%
Just Eat (JE.) 718.40p 2.05%
Energean Oil & Gas (ENOG) 658.00p 2.02%
Charter Court Financial Services Group (CCFS) 275.40p 1.92%
Superdry (SDRY) 507.00p 1.89%
Herald Investment Trust (HRI) 1,207.00p 1.86%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 1,609.00p -2.31%
Playtech (PTEC) 376.20p -1.95%
TalkTalk Telecom Group (TALK) 94.70p -1.92%
Bovis Homes Group (BVS) 1,011.50p -1.61%
Hastings Group Holdings (HSTG) 215.20p -1.28%
CYBG (CYBG) 190.10p -1.25%
Tritax Big Box Reit (BBOX) 136.90p -1.16%
William Hill (WMH) 176.05p -1.07%
Stagecoach Group (SGC) 152.40p -0.91%
888 Holdings (888) 169.50p -0.88%