Barclays Share News (BARC)

LONDON (Alliance News) - Stocks in London were higher on Friday midday, with the FTSE 100 index helped by a strong performance from banking stocks and a weak pound, as the currency took a hit following a soft UK services Purchasing Managers' Index reading.

The blue-chip index was up 0.5%, or 37.70 points, at 7,178.45. The FTSE 250 was up 0.7% at 18,388.82 and the AIM All-Share was up 0.4% at 893.18.

The BATS UK 100 index was up 0.5% at 12,134.77, the BATS 250 was up 0.8% at 16,710.36, and the BATS Small Companies was flat at 10,862.97.

The FTSE 100, full of dollar-earning companies, was benefiting from a soft pound after the UK service sector growth eased more-than-expected in January.

Survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed that the services PMI dropped to 54.5 from 56.2 in December, amid the slower output growth and higher costs, despite strong business expectations. Economists had forecast a score of 55.8. A reading above 50 suggests expansion in the sector.

"The sector continued to enjoy good levels of activity this month, with more employment and with new business orders rising for the sixth consecutive month. However, the rate of overall expansion slowed a little which is a slightly disappointing start to the year," said David Noble, group chief executive officer at CIPS.

The pound was quoted at USD1.2470 at midday, compared to USD1.2527 prior to the data release. At the London equities close on Thursday, sterling stood at USD1.2539.

Another force driving the gains in the FTSE 100 was banking stocks, benefiting from increasing optimism about softer regulation on the US banking sector under President Donald Trump.

Trump's Treasury Secretary Steve Mnuchin, a former Goldman Sachs executive, has said stricter regulations imposed on the finance industry after the financial crisis through the Dodd-Frank Act should be revisited.

"UK bank stocks are higher across the board this morning, after the magic words 'Dodd-Frank' and 'repeal' flashed across screens last night; leaving aside the political implications, the news could provide a tonic for the sector, especially as the previous narrative, that of higher US rates, starts to lose its power to inspire," said IG analyst Chris Beauchamp.

Jasper Lawler, senior market analyst at London Capital Group commented: "Since Dodd Frank was introduced, banks have devoted a lot more capital towards compliance and have had to decrease leverage, both of which are a direct hit to profitability. If Dodd Frank is watered down, that's a direct boost to the bottom line for banks."

The FTSE 350 Banks sector was up 1.2%, with Barclays up 2.6%, and Royal Bank of Scotland up 1.9%.

There were Markit services PMI readings for France, Germany, and the eurozone as a whole, showing that the region has made a strong start to 2017.

The eurozone services PMI also remained unchanged in January, at 53.7, slightly above the flash score of 53.6. The composite index held steady at 54.4 from December, slightly above the earlier flash estimate of 54.3.

The French services PMI climbed to 54.1 in January from 52.9 in December, above the flash 53.9. The composite output index rose to 54.1 in January from 53.1 in December. The flash score was 53.8.

Germany's services PMI dropped to 53.4 in January from 54.3 in December, but the score was above the flash reading of 53.2. The composite reading fell to 54.8 in January from 55.2 in December, but was above the preliminary score of 54.7.

In contrast with the positive PMI readings, the eurozone's retail sales fell unexpectedly in December, according to Eurostat.

Seasonally adjusted retail sales fell 0.3% month-on-month in December, confounding expectations for an increase of 0.3%. Nonetheless, the pace of decline slowed from fall of 0.6% in November. On a yearly basis, adjusted retail sales growth eased to 1.1% from a revised increase of 2.5% in November. Sales were forecast to rise 1.8%.

The French CAC 40 stock index was up 0.8% and the German DAX 30 was up 0.3%.

In New York, stocks were called for a higher open, with the Dow 30, the S&P 500 index and the Nasdaq Composite all pointed up 0.1%.

The main event in the economic calendar is the January US jobs report, due at 1330 GMT. The consensus estimate for non-farm payrolls according to FXStreet is for an increase of 175,000 jobs, improving from the 156,000 jobs in December. The US unemployment rate is expected to remain stable at 4.7%, and average hourly earnings growth is expected to slow to 0.2% month-on-month from 0.4% in December.

Markit services and composite PMIs for the US are at 1445 GMT, ISM non-manufacturing PMI is at 1500 GMT, as are factory orders. The Baker Hughes US oil rig count is at 1800 GMT.

Elsewhere on the London Stock Exchange, ITV was up 2.2%. The broadcaster was upgraded to Buy from Hold by Investec. Investec said it remains cautious on ITV's long-term prospects, but believes the market is overly pessimistic about near-term prospects for the broadcaster.

Reckitt Benckiser Group was 1.3% higher. The consumer health and hygiene products giant was extending gains from Thursday, when it rose 4.0% after confirming it was in talks to buy US baby formula maker Mead Johnson Nutrition for around GBP13.20 billion.

The FTSE 350 Mining Sector index was down 2.6%. Miners were suffering from jitters, according to IG's Beauchamp, "as investors start to get worried about irrational exuberance among the big names".

"Investors have enjoyed remarkable capital growth, but now the sector is no longer on the verge of disaster, many would like to see the return of dividends," said the analyst.

In the FTSE 250, specialist insurer Beazley was up 8.8%, the biggest mid-cap gainer, after saying it increased its pretax profit in 2016 following a year of strong growth in premiums written.

Halma was a another gainer, up 4.5%. The safety and environmental technology company was raised to Overweight from Equal Weight by Barclays. Halma's shares have fallen in recent months, leaving the valuation of the group looking attractive, the bank said.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2017 Alliance News Limited. All Rights Reserved.