London close: Stocks finish higher on UK GDP growth

The FTSE 100 index rose 0.19% to 8,253.65 points, and the FTSE 250 closed up 0.27% at 20,764.93 points.

In currency markets, sterling was last up 0.11% on the dollar to trade at $1.3074, as it gained 0.01% against the euro, changing hands at €1.1943.

“A rebound in the UK economy, unexpected drop in Canada unemployment, slowing US producer price inflation and JPMorgan third quarter earnings beating estimates gave stocks on both sides of the Atlantic a boost,” said IG analyst Axel Rudolph.

“The US 10-year yield rose to 4.11%, a two-month high, as the US third quarter earnings season kicked off in earnest.

“It is expected to provide volatility in the coming weeks.”

Rudolph added that oil prices had a mixed day after a volatile week amid heightened tensions in the Middle East, with potential supply disruptions remaining on the cards.

“Gold and silver prices regained lost ground ahead of the weekend as the possibility of retaliatory Israeli airstrikes on Iran remain a distinct possibility.”

UK economy grows in August, but trade deficit widens

In economic news, the UK economy showed signs of recovery in August, with GDP growing by 0.2%, according to the Office for National Statistics.

That followed flat performance in June and July, meeting economists' expectations.

The services sector, a key driver of the economy, expanded by 0.1% for the second consecutive month.

Production output increased by 0.5%, reversing a 0.7% decline in July, while construction output rose 0.4%, recovering from a previous 0.4% dip.

“All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year,” said ONS director of economic statistics Liz McKeown.

“In August, accountancy, retail and many manufacturers had strong months, while construction also recovered from July's contraction.

“These were partially offset by falls in wholesaling and oil extraction.”

Meanwhile, the UK's trade deficit widened in August as imports outpaced exports.

The ONS reported that the total trade deficit, excluding precious metals, grew by £3bn to £10bn in the three months to August.

Goods imports surged by £6.7bn, with notable increases in trade from both EU and non-EU countries, while exports rose by £3.7bn.

The trade deficit in goods expanded by £2.6bn, while the surplus in services narrowed by £0.4bn.

“The UK continues to import more goods than it exports,” said Kathleen Brooks, research director at XTB.

“However, within the trade balance data there was reason to be hopeful; our service exports remain strong.

“The trade in goods deficit between the UK and the EU, and the UK and the rest of the world, narrowed slightly, and exports of UK services rose at their fastest pace in more than six months in August.”

On the continent, German inflation continued to ease, dropping to 1.6% in September from 1.9% in August.

The decline was largely driven by falling energy costs, which offset slight increases in food prices.

Core inflation, which excludes volatile items like food and energy, fell to 2.7%, the lowest level since January 2022.

On a month-to-month basis, consumer prices remained flat after a slight drop in August.

The EU-harmonised inflation rate also dipped to 1.8%, marking a continued decline in price pressures across the bloc.

Sainsbury’s in the red, housebuilders manage gains

On London’s equity markets, shares in J Sainsbury fell 5.9% after its largest shareholder, Qatar Investment Authority, sold 109 million shares in the supermarket giant.

The shares were placed through Goldman Sachs at 280p each, representing a 2.8% discount to Thursday’s closing price.

BP slipped 0.34%, after the oil giant warned that its third-quarter results would be impacted by weak refining margins and lower oil prices.

The company followed in the footsteps of rival Shell, which issued a similar caution earlier in the week, indicating that operating profits could take a $0.4bn to $0.6bn hit.

Jupiter Fund Management declined 1.83% after it reported a significant outflow of £1.6bn in client funds during the third quarter, contributing to a drop in assets under management.

Elsewhere, recruitment firm Hays closed down 1.11% after it warned that challenging market conditions had led to a sharp drop in fees, causing the company to predict lower earnings in the first half.

On the upside, Saga surged 11.88% after revealing that it was in advanced talks with Belgium’s Ageas for a potential partnership deal.

Vistry Group recovered 2.44% after a difficult week triggered by a profit warning, even after JPMorgan Cazenove downgraded its rating on Vistry from 'overweight' to 'neutral' and slashed its price target.

Fellow housebuilders Taylor Wimpey and Barratt Redrow also gained, by 2.17% and 1.76%, respectively.

Both stocks benefited from an upbeat note by Stifel, which upgraded Barratt Redrow to ‘buy’ from ‘hold’ and reiterated Taylor Wimpey as a “top pick”.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,253.65 0.19%
FTSE 250 (MCX) 20,764.93 0.27%
techMARK (TASX) 4,771.26 -0.06%

FTSE 100 - Risers

Smith (DS) (SMDS) 456.40p 2.45%
Vistry Group (VTY) 916.50p 2.44%
Mondi (MNDI) 1,466.50p 2.30%
Taylor Wimpey (TW.) 154.30p 2.17%
Centrica (CNA) 122.75p 2.12%
Barclays (BARC) 235.85p 2.03%
Flutter Entertainment (DI) (FLTR) 18,540.00p 1.95%
Barratt Redrow (BTRW) 461.40p 1.76%
Diploma (DPLM) 4,272.00p 1.67%
BAE Systems (BA.) 1,270.00p 1.48%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 269.40p -5.90%
Prudential (PRU) 674.20p -1.71%
GSK (GSK) 1,480.00p -1.66%
Melrose Industries (MRO) 425.40p -1.47%
Vodafone Group (VOD) 74.20p -1.15%
B&M European Value Retail S.A. (DI) (BME) 406.00p -1.10%
Reckitt Benckiser Group (RKT) 4,620.00p -1.07%
Rentokil Initial (RTO) 352.30p -1.07%
BT Group (BT.A) 144.10p -1.06%
Croda International (CRDA) 4,047.00p -0.93%

FTSE 250 - Risers

Hochschild Mining (HOC) 200.50p 6.88%
Auction Technology Group (ATG) 446.00p 3.79%
Volution Group (FAN) 605.00p 3.60%
IntegraFin Holding (IHP) 355.50p 3.02%
Endeavour Mining (EDV) 1,745.00p 2.59%
CMC Markets (CMCX) 304.00p 2.53%
Crest Nicholson Holdings (CRST) 177.70p 2.33%
Centamin (DI) (CEY) 152.40p 2.28%
Games Workshop Group (GAW) 11,270.00p 2.25%
Genuit Group (GEN) 474.00p 2.24%

FTSE 250 - Fallers

Ocado Group (OCDO) 399.20p -2.35%
Aston Martin Lagonda Global Holdings (AML) 108.40p -2.25%
Greggs (GRG) 2,792.00p -2.17%
Wizz Air Holdings (WIZZ) 1,222.00p -1.93%
Jupiter Fund Management (JUP) 86.30p -1.83%
Currys (CURY) 87.60p -1.74%
Ithaca Energy (ITH) 102.60p -1.71%
Apax Global Alpha Limited (APAX) 139.80p -1.69%
AO World (AO.) 108.80p -1.65%
Bakkavor Group (BAKK) 153.50p -1.60%