London open: FTSE and sterling fall, borrowing costs rise as Burnham plans Westminster return

(Sharecast News) - London stocks slumped in early trade on Friday, along with the pound, while borrowing costs shot higher as investors reacted to the prospect of Andy Burnham's potential return to Westminster.

At 0825 BST, the FTSE 100 was 0.7% lower at 10,303.01, while sterling was down 0.3% against the dollar at 1.3367, having hit a one-month low of 1.3350 after the Mayor of Greater Manchester - who is considered more likely to favour a looser fiscal stance - announced plans to stand as the Labour party's candidate in a by-election in Makerfield.

At the same time, the yield on the 10-year gilt rose by 12 basis points to 5.108% and the yield on the 30-year gilt was up 12bps, at 5.769%.

The news came after ex-minister Josh Simons said he would step down to allow Burnham a way back into the Commons.

Kathleen Brooks, research director at XTB, said: "Plans to topple the Prime Minister have now burst into the open. Wes Streeting resigned from government, but did not announce a leadership challenge directly, as he waits for others to join the race. Andy Burnham is now expected to run in a byelection to pave a long and winding route to number 10, and Angela Raynor is also expected to run in any leadership race. Kier Starmer is also expected to stand. There is no timeline for a contest, so the current prime minister is now a lame duck indefinitely."

Brooks pointed out that sterling and gilt markets are impacted by two things: "1, the prospect of a big shift to the left that decimates growth and blows an even bigger hole in the UK's public finances, and 2, the uncertain nature of this coup to oust Kier Starmer".

"What if Andy Burnham does not win the by-election to become an MP? Who will become leader then?," she said.

"Overall, UK politics is a mess, there are already signs that foreign buyers are ditching the gilt market. If there is a major rout in the pound and/ or gilts in the coming days, prospective candidates may need to assess whether now was a wise time to make a move against the PM."

More broadly, investors were mulling the outcome of the meeting between US President Donald Trump and China's Xi Jinping.

Susannah Streeter, chief investment strategist at Wealth Club, said: "There had been hopes that the US-China summit would be a catalyst for a breakthrough in the Iran standoff or in trade relations. However, the meeting between Xi Jinping and Donald Trump was big on warm words and symbolism but not outcomes.

"Instead of reassurance, the Chinese premier's focus on Taiwan, warning missteps between the two superpowers could create clashes and conflicts, has caused nervousness about fresh geopolitical fractures looming. With diplomatic efforts aimed at resolving the Middle East conflict in limbo, fresh uncertainty has flooded in. Oil prices have risen further, with Brent crude trading above $107 a barrel, keeping inflationary concerns alight."

In equity markets, miners were under the cosh as gold, silver and copper prices fell, with Fresnillo, Anglo American, Antofagasta and Glencore among the biggest losers.

Construction products distributor Grafton Group lost ground as it said it delivered a "resilient" start to 2026, but warned that rising cost pressures due to the Iran war could dent market demand and volumes.

Centrica was in the red after agreeing to pay £20m into Ofgem's voluntary redress fund and further compensate customers whose homes were broken into by debt collectors working for British Gas to illegally fit prepayment meters, in some cases where residents were vulnerable or had disabilities.

Student accommodation provider Unite was also weaker after an AGM statement.

Market Movers

FTSE 100 (UKX) 10,303.01 -0.67%

FTSE 250 (MCX) 22,606.84 -0.97%

techMARK (TASX) 5,896.32 -0.42%

FTSE 100 - Risers

3i Group (III) 2,193.00p 3.84%

BP (BP.) 547.80p 1.31%

Shell (SHEL) 3,176.00p 0.92%

Diageo (DGE) 1,514.00p 0.87%

GSK (GSK) 1,886.50p 0.77%

Experian (EXPN) 2,580.00p 0.74%

Relx plc (REL) 2,370.00p 0.63%

Convatec Group (CTEC) 210.20p 0.57%

Marks & Spencer Group (MKS) 320.40p 0.56%

Standard Life (SDLF) 767.50p 0.52%

FTSE 100 - Fallers

Fresnillo (FRES) 3,478.00p -5.34%

Anglo American (AAL) 3,889.00p -3.37%

Antofagasta (ANTO) 4,055.00p -3.04%

Barclays (BARC) 422.20p -2.69%

Glencore (GLEN) 579.70p -2.60%

Airtel Africa (AAF) 357.60p -2.44%

Severn Trent (SVT) 3,062.00p -2.17%

Kingfisher (KGF) 279.00p -2.10%

United Utilities Group (UU.) 1,340.00p -2.10%

NATWEST GROUP (NWG) 556.20p -2.07%

FTSE 250 - Risers

IntegraFin Holding (IHP) 344.50p 1.77%

Energean (ENOG) 881.50p 0.97%

Ithaca Energy (ITH) 283.20p 0.97%

Trainline (TRN) 212.40p 0.95%

Harbour Energy (HBR) 291.60p 0.76%

Pantheon Infrastructure (PINT) 116.60p 0.69%

Diversified Energy Company (DI) (DEC) 1,184.00p 0.68%

Shawbrook Group (SHAW) 313.50p 0.64%

Premier Foods (PFD) 206.00p 0.59%

Hilton Food Group (HFG) 546.00p 0.55%

FTSE 250 - Fallers

Pan African Resources (PAF) 142.40p -4.83%

Hochschild Mining (HOC) 626.00p -4.56%

Bluefield Solar Income Fund Limited (BSIF) 76.00p -4.04%

THG (THG) 30.70p -3.63%

RTW Biotech Opportunities Ltd (RTW) 2.12p -3.20%

AO World (AO.) 87.90p -2.70%

Renishaw (RSW) 5,120.00p -2.66%

Watches of Switzerland Group (WOSG) 618.00p -2.61%

Close Brothers Group (CBG) 433.60p -2.56%

Foresight Environmental Infrastructure Limited (FGEN) 73.40p -2.52%