off-the-wire

London stocks steady after surprise contraction in October GDP

Kitco Media
By Reuters
Published:
Updated:
Reuters
London stocks steady after surprise contraction in October GDP teaser image

Dec 13 (Reuters) - The UK's blue-chip FTSE 100 nudged up on Friday, getting a slight boost from a weaker pound after data showed a surprise contraction in country's gross domestic product in October.

The FTSE 100 (.FTSE), was up 0.1%, with a weaker pound supporting export-oriented companies, while the midcap FTSE 250 (.FTMC), also gained 0.2% at 1003 GMT but was set for its first weekly loss in four.

Britain's economy shrank unexpectedly for a second month in October in the run-up to the new government's first budget.

Economists polled by Reuters had forecast a monthly expansion of 0.1% for October.

Reeves' budget statement on Oct. 30 - whose direct impact will be felt in GDP data from November onwards - imposed large tax increases on businesses.

"It's a backward-looking number for a forward-looking market and I don't think it's really big news that the UK economy isn't growing very rapidly at the moment in that respect," said Russ Mould, investment director at AJ Bell.

The pound weakened against the U.S. dollar after data showed growth surprisingly stalled in October.

The Bank of England is expected to hold rates at its policy decision next week. However, the data could prompt traders to attach a greater chance of speedier rate cuts next year.

Separately, in good news for Rachel Reeves, British consumer morale hit a four-month high in December as households grew cheerier about their finances, a survey showed, after other indicators showed a post-budget slide in business sentiment.

Meanwhile, UK's beverages (.FTNMX451010), led the sectoral gains, rising 1.4%, as spirit maker Diageo (DGE.L), extended its rise from the previous session and added 1.6%.

In contrast, the mining sector (.FTNMX551020), slipped 0.4% tracking copper prices that were set for weekly losses.

Impax Asset Management Group (IPX.L), lost 23% after the investment manager said its peer St. James's Place (SJP.L), will terminate Impax's mandate to manage the Sustainable & Responsible Equity Fund. St. James's Place rose 3.5%.

Reporting by Nikhil Sharma; Editing by Vijay Kishore

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