London midday: FTSE pares gains as investors pause for breath

(Sharecast News) - London stocks had pared gains to trade just higher by midday on Friday as investors paused for breath at the end of a busy week, with gold in focus as the price of the yellow metal came within a whisker of $5,000 an ounce. The FTSE 100 was 0.1% higher at 10,159.49, with all eyes on the gold price as it hit a record high of $4,967 an ounce.

Russ Mould, investment director at AJ Bell, said: "It's a calmer end to a chaotic week on the markets.

"While it looks like a crisis has been averted, investors' patience has been well and truly tested.

"Gold nudged ahead to trade ever closer to $5,000 an ounce as investors were reluctant to let go of their safety blanket, just in case Donald Trump woke up with another controversial idea.

"There's a lot for investors to process given the volatile first three days of the trading week, and it's only natural for people to pause and take stock of events."

On home turf, a survey out earlier revealed that business activity in the private sector saw its strongest upturn in January since April 2024.

The S&P Global flash UK PMI composite output index, rose to 53.9 from 51.4 in December. This marked the ninth reading in a row that the index was above the 50.0 mark that separates contraction from expansion. It was also the highest since April 2024.

The flash UK PMI business activity index for the services sector ticked up to a 21-month high of 54.3 in January from 51.4 the month before, while the manufacturing PMI increased to 51.6 from 50.6.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "UK businesses kicked up a gear in January, showing encouraging resilience in the face of recent geopolitical tensions. Companies are reporting higher demand, both from home and export markets, which has driven output growth to the fastest since April 2024. Firms are also reporting the greatest optimism about the business outlook since before the 2024 Autumn Budget.

"The January flash PMI is up to a level indicative of a robust quarterly GDP growth approaching 0.4%. "While growth continues to be driven by the service sector, and in particular financial services and tech, the manufacturing sector is also continuing to report a gathering recovery aided by resurgent demand, with goods exports notably rising for the first time in four years."

He added, however, that the upturn in order books failed to stem a steep loss of jobs, which companies blamed on the need to reduce high costs.

Separately, data from the Office for National Statistics showed that retail sales rose in December, beating expectations as spending picked up in the run-up to Christmas. Retail sales volumes increased 0.4% last month, comfortably ahead of consensus for a 0.1% decline.

Driving the rise was strong demand for precious metals alongside increased supermarket sales, both of which helped offset a 0.9% slide at non-food stores.

Over the quarter, sales were down 0.3%, due to weaker trading in October and November following a bumper summer, when retailers benefited from warm weather and the Women's Euro 2025 tournament.

But sales strengthened 1.3% over the year, up from 2024's more modest 0.2% uplift. It was the second consecutive annual rise, following falls in 2023 and 2022.

However, the ONS noted that volumes had yet to recover from the 2023 fall and remained below pre-pandemic levels.

Hannah Finselbach, senior statistician at the ONS, said: "The last three months of the year saw a slight drop in retail sales following a strong third quarter, with supermarkets and online stores both down.

"However, sales were up in December, with internet retailing doing well. Within this, online jewellers had a strong month, and told us there was strong demand for gold and silver."

In equity markets, defence firm BAE Systems was the top riser on the FTSE 100. Russ Mould said investors were "loading up" on names that have "served them well over the past year".

Oil giant Shell gushed higher following a Reuters report it is considering a sale of its assets in Argentina's Vaca Muerta shale play and has approached potential buyers in recent weeks to gauge their interest.

Watches of Switzerland rallied after it said late on Thursday that it had bought Texas-based Deutsch & Deutsch, a family-owned luxury watch and jewellery retailer that has been operating since the 1920s.

Restaurant, bar and café operator SSP reversed earlier gains, as it backed its full-year guidance and posted a 5% jump in first-quarter like-for-like sales.

Defence firm Babcock nudged lower as it said chief executive David Lockwood would retire at the end of 2026 after almost five years in the job and be replaced by Harry Holt, currently head of the company's nuclear division. Former army officer Holt has been on the senior management team since November 2023. Prior to that he spent seven years at Rolls Royce in a number of roles, including president of its nuclear division.

Drinks maker C&C Group tumbled as it warned on profits, citing weak consumer confidence.

Rank Group slid after Deutsche Bank downgraded shares of the Grosvenor Casinos owner to 'hold' from 'buy' and slashed the price target to 104p from 163p.

Market Movers

FTSE 100 (UKX) 10,159.49 0.09% FTSE 250 (MCX) 23,296.96 -0.32% techMARK (TASX) 5,909.57 0.35%

FTSE 100 - Risers

BAE Systems (BA.) 2,026.00p 2.07% BP (BP.) 444.50p 1.76% Marks & Spencer Group (MKS) 365.60p 1.22% Hiscox Limited (DI) (HSX) 1,519.00p 1.00% Beazley (BEZ) 1,127.00p 0.99% Shell (SHEL) 2,699.50p 0.95% Rio Tinto (RIO) 6,539.00p 0.82% Rightmove (RMV) 508.00p 0.75% Fresnillo (FRES) 4,114.00p 0.73% Metlen Energy & Metals (MTLN) 43.20p 0.70%

FTSE 100 - Fallers

Admiral Group (ADM) 2,696.00p -4.13% Burberry Group (BRBY) 1,223.50p -4.00% International Consolidated Airlines Group SA (CDI) (IAG) 415.10p -3.53% easyJet (EZJ) 482.60p -2.84% Smurfit Westrock (DI) (SWR) 3,063.00p -2.36% Spirax Group (SPX) 7,240.00p -1.76% Hikma Pharmaceuticals (HIK) 1,542.00p -1.66% Coca-Cola Europacific Partners (DI) (CCEP) 6,570.00p -1.65% Aviva (AV.) 642.60p -1.62% Coca-Cola HBC AG (CDI) (CCH) 3,848.00p -1.54%

FTSE 250 - Risers

Watches of Switzerland Group (WOSG) 540.50p 4.24% Ceres Power Holdings (CWR) 350.20p 3.61% Harbour Energy (HBR) 213.60p 3.49% Me Group International (MEGP) 135.60p 1.80% Oxford Biomedica (OXB) 867.00p 1.64% Bluefield Solar Income Fund Limited (BSIF) 69.00p 1.47% Ithaca Energy (ITH) 172.70p 1.47% CMC Markets (CMCX) 327.00p 1.40% FirstGroup (FGP) 186.50p 1.36% NCC Group (NCC) 136.80p 1.33%

FTSE 250 - Fallers

C&C Group (CDI) (CCR) 115.00p -10.58% B&M European Value Retail S.A. (DI) (BME) 165.20p -5.11% Rank Group (RNK) 93.80p -4.67% Wizz Air Holdings (WIZZ) 1,323.00p -4.41% Hays (HAS) 46.66p -3.28% Baltic Classifieds Group (BCG) 205.50p -2.38% Aston Martin Lagonda Global Holdings (AML) 61.85p -2.37% Carnival (CCL) 2,093.00p -2.20% SSP Group (SSPG) 191.00p -2.10% Renishaw (RSW) 3,805.00p -1.81%