London midday: Stocks add gains as Direct Line, Bovis rally

Thu 07 Sep 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks were trading higher by midday, extending earlier gains as investors sifted through corporate news that included well-received results from Bovis Homes, with Direct Line also lending support.
The FTSE 100 was up 0.4% to 7,383.75.

Investors were digesting the latest figures from mortgage lender Halifax, which showed UK house prices rose more than expected in August.

House prices were up 1.1% from July, comfortably ahead of forecasts of a 0.2% gain. Prices were 2.6% higher on the year, beating expectations for a 2.1% increase, while the average house price rose to £222,293 from £219,918, and was above the previous high from December 2016 of £222,190.

Next up, the focus will be on the European Central Bank rate decision at 1245 BST, followed by the press conference at 1330 BST. With rates largely expected to remain on hold, the focus will be on what chief Mario Draghi has to say.

IG analyst Chris Beauchamp said: "The big question is whether he will be able to talk down the euro for anything more than a few hours, or whether markets will simply look past his words with an expectation that a renewed tapering of QE is on its way, and that it is now merely a question of time. We know that the euro's strength is beginning to irk the ECB, but will irritation be enough to prompt them into a policy change? And given the widespread rush to buy eurozone stocks, and hence the euro, is there really much that the ECB can do anyway? Away from the world of central banking, housebuilders remain in focus in the UK."

On the corporate front, insurer Direct Line was on the front foot amid news that the government might be backtracking on its changes to the Ogden rate, which was cut to -0.75% from 2.5% in February, forcing most insurers into sizeable write-downs as the new rate meant they had to pay out more to personal injury claimants. The proposed changes would mean a rate of 0% to -1%.

Housebuilder Bovis Homes reported a 31% drop in first-half pre-tax profit but the shares rallied as investors welcomed a hike to the dividend, a special dividend and healthy margins as they put their faith in new chief executive Greg Fitzgerald. FTSE 100 peer Barratt Developments, which released its full-year results on Wednesday, also gained ground.

AstraZeneca rose after putting out a pair of positive respiratory updates from Phase III trials of combined treatment Duaklir and Phase IIb trials of tezepelumab.

Imperial Brands was up after agreeing to sell 13.275m ordinary shares of 20 euro cents each in Compañía De Distribución Integral Logista Holdings on the Madrid Stock Exchange, raising gross proceeds of £230.8m through the placing.

ZPG rallied as it announced a deal to buy financial services comparison website in deal worth up to £140m.

On the downside, Go-Ahead Group slumped as it reported that pre-tax profit for the full year fell 5.7%, while Ashmore was in the red despite posting a rise in full-year profits as underlying profit growth fell short of expectations.

Capita was under the cosh after it cuts its underlying operating profit for 2016 as it adopted new accounting standards, while Sanne retreated after the release of its first-half results.

RBS was also in the red amid calls for the full publication of a leaked report on the treatment of customers in its global restructuring group.

Admiral was weaker as it went ex-dividend, along with BHP Billiton, Land Securities, and Glencore, among others.

Market Movers

FTSE 100 (UKX) 7,383.75 0.40%
FTSE 250 (MCX) 19,604.52 -0.24%
techMARK (TASX) 3,428.30 0.25%

FTSE 100 - Risers

Imperial Brands (IMB) 3,302.50p 2.88%
Micro Focus International (MCRO) 2,407.00p 2.73%
Direct Line Insurance Group (DLG) 381.30p 2.61%
GKN (GKN) 329.40p 2.55%
British American Tobacco (BATS) 4,899.00p 1.81%
Barratt Developments (BDEV) 606.00p 1.76%
AstraZeneca (AZN) 4,631.00p 1.19%
TUI AG Reg Shs (DI) (TUI) 1,323.00p 1.15%
Johnson Matthey (JMAT) 2,865.00p 1.09%
Shire Plc (SHP) 3,996.50p 1.02%

FTSE 100 - Fallers

BHP Billiton (BLT) 1,450.50p -2.29%
Admiral Group (ADM) 1,841.00p -1.81%
Babcock International Group (BAB) 806.00p -1.35%
Paddy Power Betfair (PPB) 7,125.00p -1.18%
WPP (WPP) 1,389.00p -1.00%
Land Securities Group (LAND) 996.50p -0.94%
Rolls-Royce Holdings (RR.) 885.00p -0.78%
Standard Chartered (STAN) 744.30p -0.67%
Royal Bank of Scotland Group (RBS) 243.00p -0.65%
RSA Insurance Group (RSA) 645.50p -0.54%

FTSE 250 - Risers

Bovis Homes Group (BVS) 1,140.00p 8.37%
ZPG Plc (ZPG) 365.30p 3.02%
Euromoney Institutional Investor (ERM) 1,140.00p 2.52%
Hastings Group Holdings (HSTG) 308.20p 2.09%
Acacia Mining (ACA) 191.40p 1.65%
Nostrum Oil & Gas (NOG) 381.00p 1.60%
Petrofac Ltd. (PFC) 453.10p 1.52%
AA (AA.) 163.30p 1.43%
Northgate (NTG) 403.10p 1.36%
Indivior (INDV) 296.60p 1.30%

FTSE 250 - Fallers

Go-Ahead Group (GOG) 1,600.00p -8.73%
Ashmore Group (ASHM) 341.20p -6.57%
Pagegroup (PAGE) 477.20p -4.85%
Vectura Group (VEC) 90.80p -4.42%
Capita (CPI) 616.00p -4.35%
Phoenix Group Holdings (DI) (PHNX) 736.50p -3.16%
Sanne Group (SNN) 760.50p -2.75%
RPC Group (RPC) 893.00p -2.51%
Redefine International (RDI) 38.65p -2.47%
Restaurant Group (RTN) 306.80p -2.42%
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