London stocks were holding on to gains by midday on Thursday, helped along by a strong performance from the banking sector and well-received updates from the likes of Coca-Cola and Burberry, as investors awaited the latest policy call from the Federal Reserve.
The FTSE 100 was up 0.4% to 7,143.04, while the pound was down 0.2% against the dollar at 1.3103 and 0.1% lower versus the euro at 1.1481.
Brexit was in focus, as always, with Ireland's deputy prime minister Simon Coveney urging “caution” over any excitement that a Brexit deal could be struck in the next few days, which had been piqued by fresh reports of an imminent deal.
European Commission officials said a deal could be reached between the UK and EU in the coming days, Austrian newspaper Der Standard reported.
But, speaking at a conference, Coveney said: “Let me just say this in terms of commentary today, particularly in British media, I would urge caution that an imminent breakthrough is not necessarily to be taken for granted, not by a long shot.
“Repeatedly, people seem to make the same mistake over and over again assuming that if the British cabinet agrees something, well then that's it. Then, everything is agreed. This is a negotiation…I would urge caution that people don't get carried away on the back of rumour in the coming days.”
Meanwhile, with the US mid-term elections out of the way, investors were shifting their attention to the latest Federal Reserve policy announcement, which is due at 1900 GMT. No change is expected to interest rates.
Analyst Craig Erlam at Oanda said the Fed meeting was always the lesser of the two risks this week, but investors will be poring over the statement for any signs that recent market volatility has in any way softened plans for hikes this year and next.
“It was Jerome Powell that appeared to be the catalyst for the recent stock market sell-off when he suggested that interest rates were not close to neutral and could become restrictive, which got investors worried about the economic ramifications of such a move. The Fed may seek to clarify this in the statement today, although given the lack of a press conference I wonder whether they will instead hold off and see if the situation settles down on its own.
“It would make much more sense, given the recovery we've seen in the market, for the Fed to address the interest rate path in December when it is widely expected to raise again. This would give them the opportunity to clarify anything in the press conference that follows and lay out clear plans, alongside the dot plot, for the coming years. Instead today it may just emphasise the cautious and gradual approach to rate hikes.”
On the UK data front, the housing market was shown to be at its weakest in six years as the Royal Institution of Chartered Surveyors revealed its house price balance fell to -10 last month from -2 in September. Economists had expected an unchanged reading.
The drop was attributed mostly to London and the South East, as prices continuing to rise in other parts of the UK, with the strongest growth in Northern Ireland and Scotland.
RICS said the weaker trend in prices is being driven by the lack of demand from new buyers, which is in part a result of heightened political uncertainty, ongoing affordability pressures, a modest upward move in interest rates and a lack of fresh stock coming onto the market
Among blue chip shares, banks put in the strongest performance, with Lloyds, Barclays, RBS and Standard Chartered all making gains.
In individual company news, Coca-Cola HBC was the standout gains as the soft drinks bottler said third-quarter revenue was up 2.6% to £1.87bn, slightly ahead of analysts' expectations.
AstraZeneca was on the rise as its product sales returned to growth in the third quarter, with new cancer drugs in particular beginning to make a noticeable impact on the top line.
Luxury fashion brand Burberry gained as it said the response to new creative head Riccardo Tisci's Kingdom collection has been “exceptional” as it posted a rise in interim like-for-like sales.
Sainsbury's ticked higher as it reported a 20% increase in said half-year underlying pre-tax profits to £302m and said it remains on track to deliver current market consensus for 2018/19 underlying pre-tax profit of £634m.
Hikma Pharmaceuticals surged as it lifted its full-year guidance after solid performances from its injectables and generics divisions and OneSavings Bank advanced as it posted loan book growth of 16% for the first nine months of the year.
On the downside, Inmarsat slumped as it reported a significant third-quarter EBITDA beat but commentary around the maritime business was poor, with the company losing market share to competition in the core Fleet Broadband business.
Motoring and cycling specialist Halfords was also on the back foot as is posted an improvement in first-half sales but a sharp drop in profits.
On the broker note front, energy services provider Hunting was boosted by an upgrade to 'buy' at Canaccord Genuity, while security services firm G4S was higher despite a downgrade to 'sector perform' at RBC Capital Markets, having suffered heavy losses on Wednesday after its third-quarter update.
BP, Whitbread, Card Factory, Galliford Try, Go-Ahead Group, Greencoat UK Wind and Lancashire Holdings were among the companies whose stock went ex-dividend.
FTSE 100 (UKX) 7,143.04 0.36%
FTSE 250 (MCX) 19,227.08 0.42%
techMARK (TASX) 3,346.75 0.68%
FTSE 100 – Risers
Coca-Cola HBC AG (CDI) (CCH) 2,347.00p 3.85%
Micro Focus International (MCRO) 1,295.50p 3.19%
Lloyds Banking Group (LLOY) 59.44p 2.04%
Next (NXT) 5,434.00p 1.87%
Barclays (BARC) 178.60p 1.82%
Wood Group (John) (WG.) 703.00p 1.65%
BT Group (BT.A) 252.97p 1.49%
Associated British Foods (ABF) 2,601.00p 1.40%
Royal Bank of Scotland Group (RBS) 251.68p 1.40%
Standard Chartered (STAN) 578.10p 1.39%
FTSE 100 – Fallers
Whitbread (WTB) 4,570.00p -1.44%
NMC Health (NMC) 3,456.00p -1.26%
BP (BP.) 539.00p -0.97%
ITV (ITV) 148.55p -0.97%
Compass Group (CPG) 1,508.00p -0.76%
Ocado Group (OCDO) 853.00p -0.70%
WPP (WPP) 884.05p -0.69%
easyJet (EZJ) 1,230.00p -0.69%
British American Tobacco (BATS) 3,403.00p -0.67%
Smith (DS) (SMDS) 380.00p -0.65%
FTSE 250 – Risers
Sophos Group (SOPH) 347.00p 7.10%
Hikma Pharmaceuticals (HIK) 2,047.00p 6.75%
Hunting (HTG) 675.00p 3.93%
OneSavings Bank (OSB) 390.60p 3.61%
CYBG (CYBG) 263.40p 3.13%
G4S (GFS) 183.50p 3.00%
IntegraFin Holding (IHP) 296.00p 2.78%
Inchcape (INCH) 574.50p 2.77%
Howden Joinery Group (HWDN) 484.80p 2.76%
Sports Direct International (SPD) 322.20p 2.64%
FTSE 250 – Fallers
Inmarsat (ISAT) 433.90p -5.76%
Galliford Try (GFRD) 856.00p -4.94%
Halfords Group (HFD) 298.40p -3.74%
Go-Ahead Group (GOG) 1,536.00p -3.52%
BBA Aviation (BBA) 240.00p -3.30%
Card Factory (CARD) 185.70p -3.23%
TalkTalk Telecom Group (TALK) 124.60p -3.04%
Lancashire Holdings Limited (LRE) 598.50p -2.21%
Telecom Plus (TEP) 1,232.00p -1.75%
The Renewables Infrastructure Group Limited (TRIG) 112.57p -1.60%