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(Alliance News) - Stock prices in London edged higher at Thursday's open, following data revealing a slight contraction in the UK economy in May, while the pound rose above the USD1.30 mark.
The FTSE 100 index opened up 16.47 points, 0.2% at 7,432.58. The FTSE 250 was up 9.97 points, 0.1%, at 18,589.51, and the AIM All-Share was up 2.17 points, 0.3%, at 748.56.
The Cboe UK 100 was up 0.1% at 741.09, the Cboe UK 250 was flat at 16,307.75, and the Cboe Small Companies was down 0.5% at 13,522.57.
In European equities, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was marginally higher.
The UK economy saw a milder-than-expected contraction in May, according to figures from the Office for National Statistics.
Real gross domestic product is estimated to have fallen by 0.1% in May from the previous month, after growing 0.2% in April.
May's reading was higher than FXStreet-cited consensus of a 0.3% decline.
The print showed the UK economy was "still stagnant", according to Pantheon Macroeconomics.
"May's GDP figures demonstrate that the economy remains listless and that the recovery signalled by many of the business surveys, such as the [purchasing managers' index], has not taken hold yet," Patheon's chief UK economist Samuel Tombs said.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.7% and the Nasdaq Composite up 1.2%.
US inflation eased slightly more than anticipated in June, according to the latest figures from the Bureau of Labor Statistics.
The consumer price index rose 3.0% on an annual basis in June, cooling from a 4.0% rise in May, and undershooting market consensus of a 3.1% rise.
The pound rose to a 15-month high against the dollar. Sterling was quoted at USD1.3026 early Thursday, higher than USD1.2994 at the London equities close on Wednesday.
The euro traded at USD1.1142, higher than USD1.1119. Against the yen, the dollar was quoted at JPY138.61, up versus JPY.138.38.
The CPI data helped to lower expectations of further rate hikes from the Federal Reserve, beyond its upcoming meeting.
"We can still expect Fed officials to continue to adopt a hawkish tone on the basis that they won't want markets to prematurely start pricing in rate cuts and will want to keep the option of further hikes very much on the table," said CMC Markets' Michael Hewson.
Equities in Asia also got a boost from the US inflation print, despite data showing a slump in Chinese exports.
The Nikkei 225 index in Tokyo closed up 1.5%. In China, the Shanghai Composite closed up 1.3%, while the Hang Seng index in Hong Kong was up 2.6% in late dealings. The S&P/ASX 200 in Sydney closed up 1.6%.
Chinese exports tumbled 12.4% year-on-year in June, official data showed, marking the second successive decline and the latest sign the country's economic recovery is flagging. Imports also fell 6.8% over the same period, according to China's General Administration of Customs.
Exports are a key pillar of growth in the world's second-largest economy but apart from a brief rebound in March and April, they have declined since October 2022.
Still, while June's drop was sharper than the previous month's, the figures were better than the 15.3% fall predicted in a survey of economists by Bloomberg.
Brent oil was trading at USD80.31 a barrel, higher than USD79.93, lifted by news of rising Chinese oil imports.
Gold was quoted at USD1,961.49 an ounce early Thursday, higher than USD1,954.01 on Wednesday.
In the FTSE 100, housebuilders were the worst performers, after Barratt Developments forecast a sharp decline in home completions next year, amid a slump in demand.
The builder expects adjusted pretax profit in the financial year ended June 30 to be in line with market expectations, citing consensus of GBP800.6 million.
Over the year, it said total home completions fell to 17,206 from 17,908 year-on-year. It expects a much sharper decline in financial 2024 to a range of 13,250 to 14,250.
Barratt fell 4.4%, with Taylor Wimpey and Persimmon falling 1.4% and 1.7% in a negative read across.
The stocks also took a hit following a report from the Royal Institution of Chartered Surveyors. UK house hunter inquiries, sales and property prices slipped back further in June as mortgage rates increased, the surveyors said.
In the midcaps, Watches of Switzerland jumped 10%, on strong annual results and an optimistic outlook.
In the financial year that ended April 30, the Leicester, England-based watch retailer reported pretax profit of GBP154.8 million, up 23% from GBP126.2 million the year prior, as revenue jumped 25% to GBP1.54 billion from GBP1.24 billion.
Luxury watch sales were 28% higher, while luxury jewellery sales increased 10%.
On AIM, musicMagpie fell 12%.
The consumer goods reseller shared a disappointing set of interim results, as revenue in the six months to May 31 fell to GBP61.9 million from GBP71.3 million a year before. Pretax loss widened to GBP3.2 million from GBP1.0 million.
The results were largely due to a "challenging" first quarter, with improvement seen in the second quarter.
"Despite the tough consumer environment, we expect consumers to increasingly look to the refurbished tech market and are confident that the business has the right strategy in place for future profit growth," said CEO Steve Oliver.
Still to come on Thursday's economic calendar, there's US producer price index data and the latest jobless claims reading at 1330 BST. Minutes from the European Central Bank's latest meeting are released at 1230 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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