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LONDON (Alliance News) - Stocks in London were mostly lower on Wednesday at midday, with the pound retaining gains made the day before after stable UK employment data reinforced the previous day's report of rising inflation.

On the London Stock Exchange, Travis Perkins was leading FTSE 100 fallers after the builders' merchant unveiled plans to close stores, citing uncertainty about UK customer demand. Meanwhile, Laird was by far the worst FTSE 250 performer, losing almost half its value, after the wireless components company issued a profit warning.

The UK's ILO jobless rate came in at 4.9% in the three months ended August, unchanged from the three months to July, data from the Office for National Statistics showed. The figure matched consensus estimate.

The ONS said the number of people claiming unemployment benefits grew by 700 in September from August, below economists' forecast for an increase of 3,200. Average earnings including bonuses climbed 2.3% in August from a year ago, in line with expectations.

The pound was quoted at USD1.2307 at midday compared to USD1.2314 at the equities close on Tuesday. At the close on Monday, sterling stood at USD1.2186.

"The resilience of UK economic data continues to surprise, and means that very real questions now hover over the Bank of England. With sterling-weakness tailwinds apparently driving Britain forward, the bar for a BoE rate cut seems to be getting higher every day," said IG analyst Chris Beauchamp.

The next Monetary Policy Committee decision is on November 3, with the release of the November Inflation Report on that day as well.

The FTSE 100 index was down 0.1%, or 7.87 points, at 6,992.19. The FTSE 250 was 0.3% lower at 17,939.66, but the AIM All-Share was up 0.2% at 824.67.

The UK BATS 100 index was down 0.1% at 11,824.11, the BATS 250 was 0.2% lower at 16,313.87, and the BATS Small Companies was up 0.1% at 11,045.96.

"Equities are back in the red as investors digest suspiciously stable China GDP growth (three quarters in a row?! Really?)," noted Accendo Markets analyst Michael van Dulken.

China's economy grew 6.7% year-on-year in the third quarter of 2016, identical with the first and second quarters and falling comfortably in-line with the government's gross domestic product growth target for 2016 of 6.5% to 7.0%. The growth in the third quarter also matched economists' estimates.

China's retail sales grew 10.7% from a year earlier in September, a tad better than the anticipated 10.6% rise. Fixed asset investment improved, while industrial output growth slowed unexpectedly in the month.

The Shanghai Composite closed flat and the Hang Seng in Hong Kong edged down 0.4%. In Japan, the Nikkei 225 index in Tokyo ended up 0.2%.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 0.1% and 0.2%, respectively, at midday.

Ahead of the open on Wall Street, futures indicated both the Dow Jones Industrial Average and the S&P 500 flat, with the Nasdaq 100 down 0.2%. The US earnings season continues with investment bank Morgan Stanley releasing third-quarter results before the Wall Street open, while financial services firm American Express and e-commerce company eBay will follow after the New York equities close.

In the US economic calendar, mortgage applications are at 1200 BST, and US housing starts and building permits are at 1330 BST. Later in the day, the US Energy Information Administration's crude oil stocks are at 1530 BST.

Back in London, Travis Perkins shares were down 7.3%, after it noted the combination of weak demand, changing customer buying behaviour, and the impact of previous government boiler replacement incentive schemes had meant the plumbing, heating and bathroom markets had "been challenging". The operations of its Plumbing & Heating division will be fully reviewed and the outcome of the review and any associated costs will be communicated in 2017, Travis Perkins said.

Given that "levels of future demand remain difficult to predict", the company has chosen to implement "a number of efficiency programmes and branch closures", resulting in exceptional charges of between GBP40.0 million and GBP50.0 million in 2016. Around two thirds of these exceptional charges will be non-cash write-offs.

Plumbing peer and fellow FTSE constituent Wolseley was down 1.4%, while mid-cap peers SIG, Grafton Group and Ibstock were down 4.0%, 2.3% and 0.9%, respectively.

FTSE 100-listed Reckitt Benckiser was down 2.6%. Analysts called the consumer health and hygiene products giant's third-quarter update "weak" and "disappointing", despite Reckitt saying net revenue in the third quarter grew by 17% year-on-year to GBP2.56 billion. Like-for-like sales rose by 2%, but fell short of consensus expectations of a 2.8% increase, according to Liberum.

Burberry Group was up 1.5%. The fashion house's stock was rebounding after closing down 7.2% on Tuesday. Burberry had reported lacklustre underlying sales for its first half.

Barclays was 1.6% higher. The lender was upgraded to Buy from Hold by Investec ahead of its third quarter results on October 27.

FTSE 250 constituent Laird was down 45%. The wireless components maker said an anticipated improvement in trading in the second half of 2016 has not materialised, and its underlying pretax profit for the full year is set to fall as a result. It said that, following a disappointing first half of 2016, it had expected a better second half, particularly in its Performance Materials unit.

At the other end of the mid-cap index, Computacenter was 6.8% higher after the IT infrastructure services provider was upgraded to Buy from Neutral by UBS.

By Daniel Ruiz; danielruiz@alliancenews.com

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