London open: Stocks in the red as pound firms on reports of Brexit breakthrough
London stocks edged lower in early trade as the pound gained ground on news that a Brexit divorce bill has been agreed.
At 0830 GMT, the FTSE 100 was down 0.5% to 7,426.42 as sterling rose 0.6% versus the dollar to 1.3422, having breached 1.3430 earlier - its best level since the end of September. Meanwhile, sterling was up 0.4% against the euro at 1.1314. A stronger pound tends to dent the index, as around 70% of its constituents derive most of their earnings from overseas.
According to differing reports, the UK government has agreed to pay a Brexit divorce bill of between €40bn and €65bn (£35bn to £58bn), which is much more the €20bn Prime Minister Theresa May said she was prepared to commit to back in September.
James Hughes, chief market analyst at AxiTrader, said: "We have had no confirmation of any of these headlines from the government but expectations are that we will get confirmation in the next 24 hours. This does have the feeling of being a complete give up from the government despite such strong rhetoric previously.
"The suggestion was always that the UK would not be held to ransom, but it seems that negotiations could not carry on without a bill formalised. It also shows us that the EU cares not for any UK position or stance over the key sticking points and is very much happy to play hard ball."
With Brexit the primary focus, investors largely shrugged off claims by North Korea that it has successfully tested a new type of ballistic missile that is capable of striking anywhere on the US mainland.
In corporate news, Cineworld tumbled after confirming it will make a $3.07bn (£2.3bn) offer for US peer Regal Entertainment, the second largest chain stateside. Cineworld said it planned to fund the $23-per-share offer through new debt and by raising funds via a rights issue, which its 28% shareholder Global City Holdings has committed to a full subscription.
London Stock Exchange was in the red as it announced that chief executive Xavier Rolet has left the company after weeks of wrangling over the terms of his departure.
FirstGroup slipped as it welcomed a new strategic vision for the Great Western rail network from the Department for Transport, with the DfT confirming it would exercise its option to extend First’s franchise in the region by one year, to 1 April 2020.
IT infrastructure provider Softcat edged lower despite saying it saw a strong start to the year, with demand still strong, and it reiterated its full-year expectations.
LondonMetric nudged down after agreeing to buy two logistics warehouses for £47.6m, reflecting a blended net initial yield of 5.0% rising to a minimum of 5.6% after five years.
On the upside, Zoopla and PrimeLocation owner ZPG rallied as it posted a jump in full-year revenue and said it has agreed to acquire Netherlands-based automated property valuation and statistical market analysis firm Calcasa for €30m.
Stagecoach ticked higher as it welcomed the planned “new direction” for the UK rail network, as announced by the Secretary of State for Transport. The passenger transport operator said the Secretary of State's vision envisaged a number of changes to franchises currently operated by Stagecoach, as well as other routes, as part of plans to deliver improved integration between train and track.
Soft drinks maker Britvic fizzed higher as its full-year profit beat expectations and it lifted its full-year dividend per share by 8.2%.
Brewin Dolphin rose as its revenue for the year to the end of September was in line with expectations, while adjusted pre-tax profit was slightly ahead at £70m.
Tullow Oil gushed a little higher after saying it has secured $2.5bn of debt refinancing, while water utility Pennon was up after it posted a 2.3% increase in half-year pre-tax profit to £131.1m.
In broker note action, Spire Healthcare surged after Berenberg upgraded the stock to 'buy', while Equiniti was up after an initiation at 'buy' from Berenberg, but Fidessa was under pressure after an initiation at 'sell' from Stifel.
On the data front, net lending, consumer credit and mortgage approvals are at 0930 GMT.
Market Movers
FTSE 100 (UKX) 7,426.42 -0.46%
FTSE 250 (MCX) 20,084.64 0.29%
techMARK (TASX) 3,488.40 -0.24%
FTSE 100 - Risers
Barclays (BARC) 192.25p 2.62%
Kingfisher (KGF) 330.60p 2.35%
Barratt Developments (BDEV) 607.00p 2.02%
Persimmon (PSN) 2,582.00p 1.65%
Lloyds Banking Group (LLOY) 65.86p 1.59%
Marks & Spencer Group (MKS) 305.20p 1.40%
Berkeley Group Holdings (The) (BKG) 3,757.00p 1.35%
Sainsbury (J) (SBRY) 232.40p 1.26%
ITV (ITV) 156.90p 1.23%
Next (NXT) 4,365.40p 1.19%
FTSE 100 - Fallers
London Stock Exchange Group (LSE) 3,727.00p -1.92%
Carnival (CCL) 4,920.00p -1.80%
Randgold Resources Ltd. (RRS) 7,235.00p -1.63%
British American Tobacco (BATS) 4,890.00p -1.59%
Imperial Brands (IMB) 3,090.00p -1.50%
Diageo (DGE) 2,613.00p -1.40%
Worldpay Group (WPG) 427.00p -1.29%
Unilever (ULVR) 4,276.00p -1.24%
GlaxoSmithKline (GSK) 1,321.00p -1.16%
National Grid (NG.) 873.90p -1.09%
FTSE 250 - Risers
Spire Healthcare Group (SPI) 250.20p 6.02%
Britvic (BVIC) 795.00p 4.81%
RPC Group (RPC) 1,004.00p 4.10%
PayPoint (PAY) 935.50p 2.13%
Equiniti Group (EQN) 303.80p 2.12%
ZPG Plc (ZPG) 351.80p 1.97%
Travis Perkins (TPK) 1,555.00p 1.97%
Rank Group (RNK) 244.70p 1.96%
OneSavings Bank (OSB) 399.40p 1.91%
Brewin Dolphin Holdings (BRW) 350.60p 1.89%
FTSE 250 - Fallers
Cineworld Group (CINE) 611.58p -11.94%
Fidessa Group (FDSA) 2,431.00p -3.34%
Clarkson (CKN) 2,854.00p -2.06%
Pershing Square Holdings Ltd NPV (PSH) 1,008.00p -1.66%
Jupiter European Opportunities Trust (JEO) 718.50p -1.58%
International Public Partnerships Ltd. (INPP) 152.80p -1.42%
Ascential (ASCL) 359.90p -1.29%
Serco Group (SRP) 92.35p -1.07%
Fidelity China Special Situations (FCSS) 241.40p -1.07%
Hikma Pharmaceuticals (HIK) 1,036.00p -1.05%pen