Cobham Share News (COB)

LONDON (Alliance News) - UK stocks were trading marginally lower at midday Wednesday, but the pound briefly spiked as the level of UK unemployment benefits claimed unexpectedly fell in the immediate aftermath of the vote to leave the European Union.

The number of people claiming unemployment benefits decreased by 8,600 in July from June, confounding expectations for an increase of 9,500. This meant the claimant count held steady at 2.2% in July, its lowest level in more than 10 years.

"That relatively small dip tells us little about post-referendum trends in the context of the usual volatility of the series and its typical lag to economic developments, even aside from hard-to-discern shifts in underlying productivity performance," commented Lloyds Bank.

"As such, it will be some time before the post-referendum change in the demand and supply outlook is visible in the labour market data, leaving the principal focus on activity indicators, beginning with the July retail sales data tomorrow," the bank added.

The ILO unemployment rate came in at 4.9% in the second quarter to end of June, in line with expectations, and the same rate as seen in the three months to May. The last time it was lower was for July to September 2005.

In the second quarter, average earnings including bonuses increased by 2.4% as expected, and excluding bonuses grew 2.3% compared with a year earlier.

The employment rate was 74.5% in the second quarter, the highest since comparable records began in 1971.

Fawad Razaqzada, technical analyst at FOREX.com also believes that the labour market data reveals relatively little about the post-referendum environment.

"So far, the evidence therefore suggests that Brexit isn't having much of an impact on the jobs market," Razaqzada said. "But it is early days to gauge even the near-term impact of Brexit, while it is also possible that the data is simply an outlier. So we shouldn't jump into any conclusions, the Bank of England certainly wouldn't."

The pound initially spiked following the release to a high of USD1.3059, but then cooled to USD1.3022 by midday.

The FTSE 100 was down 0.2%, or 10.99 points, at 6,882.93. The FTSE 250 was down 0.1% at 17,790.94, and the AIM All-Share was down 0.3% to 781.30.

In mainland Europe, the CAC 40 in Paris was down 0.6%, and the DAX 30 in Frankfurt was down 0.9%.

On Wall Street before the open, futures indicated the Nasdaq 100 and S&P 500 flat, and the Dow 30 down 0.1%.

Admiral Group was the biggest faller in the FTSE 100, down 8.2%. The insurer hiked its dividend and posted higher pretax profit for the first half of 2016, but shares sank amid concerns about a fall in its Solvency II ratio and as pretax profit slightly missed expectations.

Admiral said its pretax profit for the half to the end of June was GBP189.5 million, up from GBP181.7 million a year earlier. This was a slight miss against consensus expectations for GBP191.8 million. The company's combined operating ratio was 82.2%, compared to 82.7%.

Admiral declared an interim dividend of 62.90p per share, up 23% year-on-year from 51.0p. The dividend comprises a 36.8p normal dividend, 14.2p special dividend, and a further return of 11.9p per share from surplus capital not required for solvency.

Shore Capital said the "noise" about the company's Solvency II position, which dipped to 180% at the end of June from 206% at the end of 2015, was a key concern, along with worries around the impact of the UK voting to leave the European Union.

The US Architectural Billings Index, a leading indicator of non-residential construction activity in the US, delivered a sixth straight month of growth in July, which Davy Stockbrokers said should read positively for London-listed building materials firms like CRH.

The index came in at 51.5 in July, slightly below the 52.6 recorded in June but still above 50-point line which separates growth and contraction. CRH was the best performer in the FTSE 100, up 2.1%.

Drugmaker Indivior led the mid-cap risers, up 12%, after it received positive top-line results for the pivotal phase 3 clinical trial of its RBP-6000 buprenorphine monthly depot.

RBP-6000 is an investigational new drug for the treatment of opioid use disorder. Indivior said it remains on track to complete the data analysis of the phase 3 trial as well as the open-label long-term assessment of the safety and tolerability of the drug by the first quarter of 2017.

"We believe that RBP-6000 can potentially transform the treatment of opioid dependence, if approved, by possibly reducing patients' treatment administration days from 365 a year to 12," Chief Executive Shaun Thaxter said.

Balfour Beatty was up 6.7% after the construction and infrastructure company said it has reinstated its dividend after its pretax loss narrowed in the first half of 2016.

The group said its pretax loss for the six months to the end of June was GBP21.0 million, narrowed from the GBP150.0 million loss reported a year earlier, when Balfour booked writedowns on onerous contracts in its UK construction arm. Balfour had said at the time that more than 90% of these problem contracts would be at practical or financial completion by the end of 2016.

In light of the "fundamental changes" undertaken in the business to reduce its "poor contract discipline" and "unaffordable overhead costs", Balfour said it was reinstating the interim dividend and will pay 0.90 pence per share, having paid no dividend a year earlier.

Aerospace and defence technology company Cobham said its chief executive will step down at the end of 2016 and will be replaced by the boss of wireless components designer Laird.

Bob Murphy, Cobham's current CEO, will step down no later than the end of 2016 to "pursue other opportunities", Cobham said. He will be replaced by David Lockwood, currently the CEO at Laird, who will join the company no later than January 1, 2017.

Laird will replace Lockwood with Tony Quinlan, its current chief financial officer. He will take the top job on September 5, when Lockwood will step down. Laird shares were down 7.3%, the worst midcap performer, while Cobham was up 3.4%.

Still ahead in the economic calendar, EIA crude oil stocks data are at 1530 BST. The minutes of the July Federal Open Market Committee policy meeting are released at 1900 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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