London stocks had reversed earlier losses to trade a little higher by midday as the pound slipped back below $1.30 after the latest data from the Office for National Statistics confirmed that UK growth slowed in the first quarter.
The FTSE 100 was up 0.3% to 7,368.91, while the pound was up 0.1% against the euro at 1.1376 but down 0.3% versus the dollar at 1.2967 after the GDP figures. A weaker pound tends to benefit the index as around 70% of its constituents derive their earnings from overseas.
The final estimate from the ONS confirmed that UK gross domestic product grew 0.2% in the first quarter, as expected, down sharply from 0.7% growth in the fourth quarter of last year and a 1.9% rise on an annual basis.
Growth was driven by business services and construction, partially offset by declines in some consumer-focused industries, such as retail sales and accommodation. Growth in the services sector was revised down to 0.1% from 0.2%.
Chris Williamson, chief business economist at IHS Markit, said: “Fresh official data reveal how the economy slowed sharply at the start of the year as higher prices squeezed households, but other pockets of growth and stronger business survey data suggest the economy should have regained some momentum in the second quarter.
“The squeeze on household spending is no surprise, given recent weak wage growth and rising inflation. The squeeze may well continue through the rest of the year, as inflation looks set to rise further. The big question is whether other parts of the economy can take up the slack from squeezed households.
Earlier, the latest survey from GfK showed consumer confidence in the UK fell to its lowest level since the aftermath of the Brexit vote in June. GfK's consumer confidence index declined to -10 from- 5 in May, missing expectations for a smaller drop to -7 as rising prices and worries about the inconclusive general election put shoppers off big purchases.
All five constituents fell in June, with the biggest drop in the major purchase index, which slid eight points from May to 1, eight points lower than June 2016. The index measuring changes in personal finances in the last 12 months dropped three points to -1, seven points below this time last year, while the measure for the general economic situation during the last 12 months was down five points to -25, which was 12 points below June 2016.
John Staton, head of market dynamics at GfK, said: “This month's survey covers the period before and after the UK general election and reveals a sharp drop in confidence among consumers across all measures. The overall index score is just two points away from last year's post-Referendum low of -12. We have falls this month reflecting negative sentiment about our personal financial situation and expectations for the wider economy. The scores on the general economic situation looking forward and back 12 months are now particularly weak.”
In corporate news, John Laing Group edged higher after saying it was pleased with its first-half portfolio progress, while BHP Billiton ticked up after announcing the approval of $250m in financial support for the Renova Foundation and Samarco Mineração until 31 December 2017.
FTSE 250 service company Serco was on the back foot after confirming full-year expectations and saying adjusted pre-tax profit for the first half will be lower than last year.
Shares in video games retailer Game Digital tanked after it cautioned that full-year profit will be “substantially” below previous expectations due challenging trading conditions, low supplies of the Nintendo Switch in the UK and softness in its core Xbox and PayStation markets.
United Utilities was under the cosh after Credit Suisse cut its stance on the stock to 'underperform', while Greene King was hit by a downgrade to 'neutral' at JPMorgan Cazenove.
FTSE 100 (UKX) 7,368.91 0.25%
FTSE 250 (MCX) 19,388.38 0.22%
techMARK (TASX) 3,521.16 0.33%
FTSE 100 – Risers
Burberry Group (BRBY) 1,687.00p 2.06%
Smurfit Kappa Group (SKG) 2,401.00p 1.74%
Standard Life (SL.) 401.80p 1.72%
Coca-Cola HBC AG (CDI) (CCH) 2,289.00p 1.69%
Whitbread (WTB) 4,004.00p 1.65%
Ashtead Group (AHT) 1,607.00p 1.64%
Mediclinic International (MDC) 745.50p 1.64%
easyJet (EZJ) 1,369.00p 1.63%
TUI AG Reg Shs (DI) (TUI) 1,127.00p 1.62%
Convatec Group (CTEC) 319.90p 1.62%
FTSE 100 – Fallers
United Utilities Group (UU.) 879.50p -2.11%
Next (NXT) 3,917.00p -1.48%
Tesco (TSCO) 169.60p -1.40%
Royal Bank of Scotland Group (RBS) 249.90p -1.19%
Lloyds Banking Group (LLOY) 66.51p -0.95%
Sainsbury (J) (SBRY) 253.80p -0.70%
BP (BP.) 446.80p -0.69%
Royal Dutch Shell 'B' (RDSB) 2,080.50p -0.67%
ITV (ITV) 181.60p -0.66%
Marks & Spencer Group (MKS) 338.30p -0.65%
FTSE 250 – Risers
IG Group Holdings (IGG) 577.00p 3.13%
Evraz (EVR) 210.00p 2.89%
Softcat (SCT) 388.20p 2.89%
Domino's Pizza Group (DOM) 294.80p 2.86%
Just Group (JUST) 130.10p 2.20%
Renishaw (RSW) 3,622.00p 2.17%
UDG Healthcare Public Limited Company (UDG) 865.00p 2.00%
Auto Trader Group (AUTO) 383.10p 2.00%
Paysafe Group (PAYS) 516.50p 1.97%
SIG (SHI) 149.50p 1.91%
FTSE 250 – Fallers
Sirius Minerals (SXX) 29.85p -5.24%
Supergroup (SGP) 1,490.00p -3.62%
Serco Group (SRP) 114.70p -3.13%
Greene King (GNK) 669.50p -2.76%
TalkTalk Telecom Group (TALK) 178.50p -2.25%
Nostrum Oil & Gas (NOG) 483.60p -2.11%
Dixons Carphone (DC.) 283.10p -2.01%
Tullow Oil (TLW) 150.90p -1.89%
Northgate (NTG) 443.00p -1.88%
Electra Private Equity (ELTA) 1,765.00p -1.84%