London stocks had extended gains by midday on Friday as investors mulled the latest UK retail sales and business activity figures.
The FTSE 100 was up 0.9% at 7,027.42.
Data released earlier by the Office for National Statistics showed retail sales rose between May and June, helped along by the Euros. Sales were up 0.5%, coming in a touch above consensus expectations for 0.4% growth. Compared with their pre-pandemic February 2020 levels, sales were 9.5% higher.
The largest contribution came from food stores, which saw sales volumes rise 4.2%. The ONS said anecdotal evidence suggested the increase was linked to the start of the Euro 2020 football championship.
On the other hand, non-food stores saw sales volumes drop 1.7%, which was their first fall on the month since January 2021. Meanwhile, fuel sales increased 2.3% from May as people travelled more thanks to easing restrictions, but remained 2.1% below their pre-pandemic levels.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the temporary boost to food spending from Euros will fade, while higher confidence does not appear to be translating to higher levels of economic activity, due to the recent rise in Covid-19 cases.
Separate data showed business activity growth slowed in July, with private sector growth hitting a four-month low as shortages of staff and materials held back the recovery.
The flash IHS/Markit composite output index – which measures activity in the services and manufacturing sectors – fell to 57.7 from 62.2 in June. This marked the lowest level reading since the easing of lockdown restrictions began in March.
The manufacturing purchasing managers’ index printed at 60.4 in July, down from 63.9 the month before. The services PMI, meanwhile, came in at a four-month low of 57.8 compared to 62.4 in June.
Survey respondents highlighted severe shortages of raw materials and the impact of Covid-19 isolation on staff availability.
Chris Williamson, chief business economist at IHS Markit, said: “July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.
“Although business activity continued to grow, aided by the easing of lockdown restrictions to the lowest since the pandemic began, the rate of expansion slowed sharply to the weakest since March.”
In equity markets, Ultra Electronics surged more than 30% after the defence company said it was minded to recommend a £2.58bn takeover bid from Cobham to shareholders. Cobham, owned by US private-equity firm Advent International, has offered £35 a share, a 42% premium to Ultra’s share price of £24.70 on Thursday.
Telecoms operator Vodafone rallied after it reported a rise in first-quarter revenue as European and African services returned to growth.
Beazley was a high riser after saying it swung to a profit in the first half of the year as premium rates improved across its divisions, while wealth manager Brewin Dolphin pushed higher as it reported an increase in quarterly net inflows.
Mr Kipling and Bisto owner Premier Foods also advanced as it said full-year adjusted pre-tax profit was set to be at the top end of its expectations after “a very encouraging start to the year”.
Market Movers
FTSE 100 (UKX) 7,027.42 0.85%
FTSE 250 (MCX) 22,873.49 0.87%
techMARK (TASX) 4,498.94 1.77%
FTSE 100 – Risers
NATWEST GROUP PLC ORD 100P (NWG) 199.35p 2.65%
Vodafone Group (VOD) 119.10p 2.64%
Melrose Industries (MRO) 158.55p 2.55%
Antofagasta (ANTO) 1,452.50p 2.51%
Evraz (EVR) 614.80p 2.36%
Anglo American (AAL) 2,978.50p 2.35%
3i Group (III) 1,292.00p 2.30%
Rolls-Royce Holdings (RR.) 97.42p 2.25%
Next (NXT) 8,194.00p 2.17%
Intermediate Capital Group (ICP) 2,227.00p 2.16%
FTSE 100 – Fallers
Flutter Entertainment (CDI) (FLTR) 12,830.00p -1.19%
Kingfisher (KGF) 371.20p -0.91%
Avast (AVST) 576.60p -0.59%
Relx plc (REL) 2,053.00p -0.39%
SEGRO (SGRO) 1,197.00p -0.29%
National Grid (NG.) 916.40p -0.23%
Sainsbury (J) (SBRY) 280.10p -0.21%
Reckitt Benckiser Group (RKT) 6,198.00p -0.21%
Entain (ENT) 1,847.50p -0.19%
Persimmon (PSN) 2,877.00p -0.14%
FTSE 250 – Risers
Ultra Electronics Holdings (ULE) 3,288.00p 33.12%
Beazley (BEZ) 386.50p 7.06%
Lancashire Holdings Limited (LRE) 660.50p 4.26%
Tullow Oil (TLW) 47.92p 4.02%
Premier Foods (PFD) 108.80p 3.62%
HGCapital Trust (HGT) 388.00p 3.60%
Bytes Technology Group (BYIT) 460.60p 3.27%
Meggitt (MGGT) 442.30p 3.27%
Avon Protection (AVON) 2,646.00p 3.20%
Essentra (ESNT) 290.00p 2.84%
FTSE 250 – Fallers
Fidelity China Special Situations (FCSS) 377.00p -2.58%
Future (FUTR) 3,510.00p -1.90%
Vietnam Enterprise Investments (DI) (VEIL) 670.00p -1.47%
Kainos Group (KNOS) 1,621.00p -1.40%
XP Power Ltd. (DI) (XPP) 5,020.00p -1.38%
Centrica (CNA) 48.63p -1.36%
Indivior (INDV) 152.60p -1.29%
Workspace Group (WKP) 838.50p -1.18%
Network International Holdings (NETW) 353.20p -1.15%
TP Icap Group (TCAP) 193.46p -0.99%
