London open: Stocks gain as UK economy returns to growth

(Sharecast News) - London stocks gained in early trade on Friday after data showed the UK economy returned to growth in November, and as investors eyed earnings from US banking behemoths.

At 0825 GMT, the FTSE 100 was up 0.7% at 7,625.65.

Figures released earlier by the Office for National Statistics showed that GDP grew by 0.3% in November following a 0.3% contraction in October. This was ahead of economists' expectations for a 0.2% expansion.

The ONS said most of the growth was down to the services sector, which expanded 0.4% in November, having shrunk 0.1% in October.

In the three months to November, however, GDP was estimated to have fallen by 0.2% on the previous three-month period. Economists were expecting a 0.1% drop.

ONS chief economist Grant Fitzner said of the latest data: "The economy contracted a little over the three months to November, with widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action.

"GDP bounced back in the month of November, however, led by services with retail, car leasing and computer games companies all having a buoyant month.

"The longer-term picture remains one of an economy that has shown little growth over the last year."

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The UK's economy squeezed out a small drop of economic juice in November, with month-on-month GDP rising to 0.3%, from minus 0.3% in October. This could be a sign that people were getting ready for Christmas early, and all eyes will now be on how December itself shaped up, once consumers had potentially emptied their wallets on Black Friday deals.

"A sluggish metabolism has become the new norm for the UK as higher interest rates and deep-rooted productivity problems continue to bite. The lack of meaningful movement, in theory, adds weight to hopes that the Bank of England will be comfortable holding interest rates where they are, but there are unfortunately some more hoops to jump through before that becomes a certainty.

"Inflation's moving in the right direction but still isn't where it needs to be, and that's a major blocker to looser monetary policy being allowed through."

Looking ahead to the rest of the day, attention will turn to earnings across the pond, with big banks JPMorgan, Bank of America and Citigroup among those slated to report.

In UK equity markets, luxury fashion group Burberry tumbled as it delivered a significant profit warning on the back of the well-cited slowdown in luxury demand that has rocked the industry over recent months.

The company now expects adjusted operating profit for the financial year to 30 March 2024 to be between £410m and £460m, well below the £552m to £668m range guided to at its interim results just two months ago.

UK housebuilder Vistry was up as it said its 2023 financial performance would be ahead of expectations, driven by strong forward sales.

Oil industry services company Wood Group also rose as it said full-year adjusted core earnings would be slightly ahead of expectations on the back of a strong order book.

In broker note action, Bunzl was boosted by an upgrade to 'equalweight' at Morgan Stanley.

Market Movers

FTSE 100 (UKX) 7,625.65 0.65% FTSE 250 (MCX) 19,214.42 0.56% techMARK (TASX) 4,277.71 0.49%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,455.00p 2.11% Rio Tinto (RIO) 5,528.00p 1.39% Fresnillo (FRES) 524.80p 1.39% Rightmove (RMV) 557.40p 1.38% Associated British Foods (ABF) 2,283.00p 1.29% NATWEST GROUP (NWG) 214.40p 1.28% Standard Chartered (STAN) 621.00p 1.24% Whitbread (WTB) 3,677.00p 1.24% Barclays (BARC) 147.38p 1.24% Barratt Developments (BDEV) 542.00p 1.19%

FTSE 100 - Fallers

Diageo (DGE) 2,796.00p -0.69% F&C Investment Trust (FCIT) 942.00p -0.32% BT Group (BT.A) 115.10p -0.30% Rentokil Initial (RTO) 418.80p -0.29% Ocado Group (OCDO) 659.80p -0.24% Airtel Africa (AAF) 129.40p -0.23% Vodafone Group (VOD) 67.07p -0.06% Informa (INF) 765.40p -0.03% Unite Group (UTG) 1,023.00p 0.00% Burberry Group (BRBY) 1,360.50p 0.00%

FTSE 250 - Risers

Primary Health Properties (PHP) 105.00p 4.48% Hilton Food Group (HFG) 806.00p 4.40% Computacenter (CCC) 2,804.00p 3.47% Volution Group (FAN) 423.40p 3.37% Elementis (ELM) 125.20p 3.30% Morgan Sindall Group (MGNS) 2,230.00p 3.24% Trainline (TRN) 321.20p 3.15% Drax Group (DRX) 532.60p 2.62% Marshalls (MSLH) 262.40p 2.42% Mitchells & Butlers (MAB) 254.00p 2.42%

FTSE 250 - Fallers

FDM Group (Holdings) (FDM) 427.00p -2.06% Moonpig Group (MOON) 153.00p -1.99% Currys (CURY) 46.20p -1.83% JTC (JTC) 760.50p -1.62% IntegraFin Holding (IHP) 281.80p -1.54% Dr. Martens (DOCS) 77.60p -1.52% Quilter (QLT) 100.80p -1.47% Lancashire Holdings Limited (LRE) 590.50p -0.92% International Distributions Services (IDS) 250.00p -0.32% Tullow Oil (TLW) 32.10p -0.31%