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(Sharecast News) - London stocks finished on a mixed note on Tuesday as data showed the UK jobs market cooled in August and sterling leaped higher on Brexit deal hopes.
The FTSE 100 was down 0.03% at 7,211.64, while the pound was 0.98% stronger against the US dollar to 1.2728 and by 0.91% versus the euro at 1.1538, after Bloomberg cited two European Union officials as saying that Brexit negotiators were closing in on a draft Brexit deal.
Sterling had earlier risen as high as 1.2801 - to atop its 200-day moving average - on the back of the same Bloomberg report, but was knocked off its perch, a four-month high, after two EU officials told Reuters that an earlier report of a breakthrough being close were "premature".
However, gains for domestic-focused shares stuck, with the second-tier index adding 1.34% to 20,196.97 - its highest closing value in over a year.
Earlier, the Office for National Statistics published data showing the UK unemployment rate unexpectedly ticked higher in August.
In the three months to August, the number of people employed fell by 56,000 to 32.69 million, missing consensus expectations of a 26,000 increase and marking the worst decline since the spring of 2015. This pushed the unemployment rate up to 3.9% from 3.8% in July, which was the lowest rate since January 1975. Economists had been expecting the rate to remain unchanged.
Total earnings growth including bonuses rose by 3.8% in the three months to August on an annual basis, down from revised 4% growth in the previous three-month period and undershooting expectations for an unchanged reading.
Excluding bonuses, average earnings were up 3.8%, down from 3.9% in the previous three-month period but above the 3.7% expected by some economists.
Thomas Pugh, UK economist at Capital Economics, said: "This is further evidence that the underlying weakness in economic growth is restraining labour market activity. However, it could also be evidence that the uncertainty around Brexit is starting to impact firms hiring decisions. The survey evidence is consistent with a further softening in employment and wage growth going forward too.
"That all said, the labour market remains the strongest part of the economy. Annual employment growth may no longer be rising, but is still around its long-run average of 1.0% and the unemployment rate remains at a joint 45-year low. So the labour market still looks set to provide solid support to the economy over the next few years."
Elsewhere, Sino-US trade relations remained in focus after Bloomberg reported that China will struggle to buy $50bn of US farm goods a year unless it removes retaliatory tariffs on American products, a move it would only make if US President Trump reciprocates and rolls back levies implemented since the trade spat between the two began.
Bloomberg cited people familiar with the matter as saying that Beijing is willing to start purchasing more US agricultural products as part of the "phase one" deal agreed last week, but is unlikely to reach the $40bn to $50bn touted by Trump under current circumstances.
In UK equity markets, disappointing updates from the likes of molten metal flow engineering group Vesuvius, engineer Renishaw and pub group Marston's took their toll, while Bellway slid after the housebuilder reported a jump in full-year profit amid strong demand but warned over margins.
Safehavens were mostly in the red as well, with AstraZeneca, Diageo, Fresnillo, GlaxoSmithKline and Reckitt Benckiser all weaker.
Woodford Patient Capital Trust was under pressure following news that the flagship investment fund of one-time stock market star Neil Woodford was set to be wound up. The fund's administrator, Link Fund Solutions, said cash from the £3.5bn Woodford Equity Income Fund, which has been suspended since June, would be returned to investors.
On the upside, banks advanced amid Brexit hopes, with RBS, Lloyds and Barclays all higher, while Premier Inn owner Whitbread was boosted by an upgrade to 'buy' at UBS and homeware retailer Dunelm was up after an upgrade by RBC Capital Markets.
Recruiter Hays rallied as its first-quarter results beat expectations, while gambling operator Rank Group was on the front foot as it said group like-for-like net gaming revenue rose 10% in Q1.
Market Movers
FTSE 100 (UKX) 7,211.64 -0.03%
FTSE 250 (MCX) 20,196.97 1.34%
techMARK (TASX) 3,837.88 -0.37%
FTSE 100 - Risers
Land Securities Group (LAND) 946.00p 6.08%
British Land Company (BLND) 623.00p 5.45%
Auto Trader Group (AUTO) 553.00p 5.32%
United Utilities Group (UU.) 865.40p 5.25%
Lloyds Banking Group (LLOY) 60.82p 5.24%
Barratt Developments (BDEV) 683.00p 5.14%
Royal Bank of Scotland Group (RBS) 226.50p 5.07%
ITV (ITV) 134.55p 4.91%
Ocado Group (OCDO) 1,363.50p 4.68%
International Consolidated Airlines Group SA (CDI) (IAG) 515.20p 4.21%
FTSE 100 - Fallers
Fresnillo (FRES) 615.20p -3.75%
Evraz (EVR) 404.50p -3.28%
Reckitt Benckiser Group (RB.) 5,940.00p -2.51%
Relx plc (REL) 1,772.50p -2.42%
Compass Group (CPG) 1,954.50p -2.37%
Rio Tinto (RIO) 4,031.00p -2.33%
Diageo (DGE) 3,164.00p -2.06%
BHP Group (BHP) 1,642.20p -1.96%
GlaxoSmithKline (GSK) 1,655.60p -1.70%
Unilever (ULVR) 4,565.50p -1.65%
FTSE 250 - Risers
OneSavings Bank (OSB) 399.80p 11.24%
Hays (HAS) 155.40p 8.14%
Hammerson (HMSO) 322.00p 7.30%
Rank Group (RNK) 212.50p 6.89%
CYBG (CYBG) 134.35p 6.04%
BMO Commercial Property Trust Limited (BCPT) 122.40p 5.70%
Travis Perkins (TPK) 1,436.50p 5.39%
Grafton Group Units (GFTU) 855.00p 5.36%
Restaurant Group (RTN) 148.60p 5.24%
Kainos Group (KNOS) 494.00p 5.15%
FTSE 250 - Fallers
Vesuvius (VSVS) 341.00p -18.11%
Marston's (MARS) 113.00p -7.38%
Renishaw (RSW) 3,316.00p -6.85%
RHI Magnesita N.V. (DI) (RHIM) 3,600.00p -6.48%
Bodycote (BOY) 652.00p -6.46%
Morgan Advanced Materials (MGAM) 235.00p -4.08%
Spectris (SXS) 2,310.00p -3.71%
Bellway (BWY) 3,403.00p -3.49%
Sirius Minerals (SXX) 3.59p -3.48%
Watches of Switzerland Group (WOSG) 286.00p -3.05%
3 Aug 2023 12:17
LONDON MARKET MIDDAY: Pound under pressure after BoE hike
(Alliance News) - European equities went into Thursday afternoon on the back foot, extending losses suffered on Wednesday following a US credit rating cut from Fitch, while the pound struggled to make headway after the Bank of England raised rates by 25 basis points, as expected.
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