LONDON (ShareCast) - (Sharecast News) - London stocks ended lower on Friday as mixed economic data and weakness in heavyweight banking shares dragged on sentiment.
The FTSE 100 slipped 0.12% to close at 9,216.67, while the more domestically focused FTSE 250 fell 0.63% to 21,589.93.

"This downturn comes as investors take stock of the recent decisions made by various central banks, placing particular emphasis on the actions of the US Federal Reserve, which has been the focal point of attention," said Patrick Munnelly, market strategy partner at TickMill.

"The week has seen considerable fluctuations in the market as traders react to economic indicators and monetary policy shifts, reflecting broader concerns about inflation, interest rates, and economic growth."

Banks led the declines on the blue-chip index, offsetting gains in some defensive sectors and leaving the broader market in the red.

"Sterling weakness off the back of higher than anticipated UK public borrowing helped the FTSE 100, given the dominance of overseas earners in the index, with precious metal miners leading the way," noted AJ Bell investment director Russ Mould.

"Retailers and banks were among those under pressure in early trading."

In currency markets, sterling weakened against major peers, falling 0.59% against the dollar to $1.3472 and slipping 0.22% versus the euro to €1.1474.

UK consumer confidence weakens as public borrowing surges

UK economic data painted a mixed picture on Friday, with confidence among consumers weakening even as retail sales edged higher, while surging public borrowing highlighted mounting fiscal strains ahead of November's Budget.

GfK's long-running consumer confidence index fell two points to -19 in September, as worries over day-to-day costs deepened.

All sub-measures declined, including the forward-looking general economic index, which slipped to -32 from -30.

"There's an autumnal chill in the air this month," said GfK consumer insights director Neil Bellamy.

"The August decrease in interest rates does not appear to have provided any obvious boost to the financial mood for consumers, or drawn attention away from day-to-day cost issues."

The survey of 2,003 people was conducted just before the Bank of England held rates at 4% on Thursday, as it continued to weigh sluggish growth against persistently high inflation.

"Any glow the retail sector enjoyed from the warm weather sales boost seen in August will have been almost immediately washed away like falling leaves on a wet autumn day as consumer confidence in the UK softens," said Mould.

"In this context it is no surprise that consumer confidence has weakened materially, and it is hard to see reasons why it might improve in the near term.

"This creates a negative backdrop of retailers heading into their so-called 'golden quarter', during which many companies may struggle to shine."

Retail sales offered a brighter note, with volumes rising 0.5% in August following a downwardly revised 0.5% gain in July, according to the Office for National Statistics.

Analysts had expected a 0.3% increase.

The ONS said stronger demand for clothing, books, and non-store retailing helped offset weakness in automotive fuel and electronics.

British Retail Consortium director of insight Kris Hamer said: "August closed out a bright summer of retail sales on a high note ... however, business confidence remains weak.

"And there is little sign of improvement in the run up to Christmas, especially with the Budget falling so close to Black Friday and fears of potential further tax rises."

Public finances showed renewed strain, with official figures revealing the government borrowed £18bn in August, the highest for that month in five years and well above the £12.5bn forecast by the Office for Budget Responsibility.

Borrowing for the financial year to date had now reached £83.8bn, £16.2bn higher than the same period a year ago.

"Alarm bells are ringing in the Treasury after new figures showed public finances to be in a worse state than expected," said Mould.

"That's saying something, given expectations were already rock bottom.

"It makes Chancellor Rachel Reeves' job of plugging the black hole even harder and raises the likelihood of a swathe of uncomfortable decisions at November's Budget."

Rabobank analysts said gilt yields rose while sterling weakened on the data, adding: "In short, tax hikes are pretty much unavoidable."

Munnelly said participants in the gilt market "will need to balance the medium-term fiscal sustainability challenges stemming from the OBR's productivity revision against the relatively low probability of substantial upward revisions to near-term gilt supply."

Internationally, the Bank of Japan held its policy rate at 0.5% but surprised markets by revealing plans to start selling its vast holdings of exchange-traded funds.

The decision came with a split vote, after two policymakers pushed for a rate hike to 0.75%. BoJ governor Kazuo Ueda said inflation was "still somewhat below 2%, but approaching that level", while cautioning that "we also need to be mindful of downside economic and price risks, given the impact from US tariffs will start to intensify."

Mould noted that while the BoJ's ETF holdings were huge, "for now, a pace of selling which would see it take more than a century to offload its entire ETF position suggests a wish to avoid doing anything which would result in too much disruption.

"However, investors will likely be watchful for any indication of selling ramping up."

Spire Healthcare in the green, big banks prove a drag

On London's equity markets, Spire Healthcare was among the risers on Friday, jumping 14.09% after confirming it had launched a strategic review that could lead to a sale.

Munnelly noted the stock was among the leading gainers on the FTSE 250, after "the company initiated discussions with multiple parties to consider strategic options, such as a possible sale.

"The review is still in its early phases; no decisions have been made and no proposals have been received, according to Spire."

Mining stocks also advanced as metal prices gained, with Fresnillo up 5.18%, Antofagasta rising 1.71% and Anglo American adding 0.63%.

Next recovered 2.55% after heavy losses on Thursday, while Rolls-Royce climbed 1.81% after Goldman Sachs reinstated coverage at 'buy' with a 1,290p target price.

Banks were a drag, with NatWest down 2.51% and Lloyds off 1.98% after mixed UK economic data, while Barclays slipped 0.75%.

Investec dropped 3.33% after flagging broadly flat interim results, and Kainos fell 1.92% after announcing the acquisition of Canadian consultancy Davis Pierrynowski.

London Stock Exchange Group tumbled 5.77% following weakness in US peer FactSet, while Ashtead shed 2.39% after an RBC downgrade to 'underperform'.

Clarkson lost 3.28% as shipping rates from Shanghai continued to fall, and Raspberry Pi retreated 5.82% ahead of results next week.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 9,216.67 -0.12%
FTSE 250 (MCX) 21,589.93 -0.63%
techMARK (TASX) 5,437.25 0.46%

FTSE 100 - Risers

Fresnillo (FRES) 2,276.00p 5.18%
Next (NXT) 11,870.00p 2.55%
Coca-Cola HBC AG (CDI) (CCH) 3,644.00p 2.07%
Glencore (GLEN) 312.95p 1.82%
Rolls-Royce Holdings (RR.) 1,150.00p 1.81%
Antofagasta (ANTO) 2,323.00p 1.71%
Flutter Entertainment (DI) (FLTR) 20,950.00p 1.60%
GSK (GSK) 1,496.50p 1.60%
M&G (MNG) 258.80p 1.57%
Land Securities Group (LAND) 561.50p 1.35%

FTSE 100 - Fallers

London Stock Exchange Group (LSEG) 8,138.00p -5.77%
WPP (WPP) 360.70p -5.18%
JD Sports Fashion (JD.) 88.42p -3.85%
NATWEST GROUP (NWG) 512.60p -2.51%
Ashtead Group (AHT) 5,234.00p -2.39%
Airtel Africa (AAF) 221.20p -2.30%
Lloyds Banking Group (LLOY) 82.14p -1.98%
Informa (INF) 915.60p -1.93%
Convatec Group (CTEC) 231.80p -1.70%
Relx plc (REL) 3,489.00p -1.67%

FTSE 250 - Risers

Spire Healthcare Group (SPI) 247.00p 14.09%
Man Group (EMG) 175.50p 5.34%
Endeavour Mining (EDV) 2,828.00p 5.05%
Wickes Group (WIX) 213.00p 4.93%
Syncona Limited NPV (SYNC) 99.30p 4.53%
Hochschild Mining (HOC) 314.20p 4.45%
Oxford Instruments (OXIG) 1,894.00p 2.82%
Premier Foods (PFD) 192.40p 2.78%
Renishaw (RSW) 3,595.00p 2.70%
The European Smaller Companies Trust (ESCT) 210.00p 2.63%

FTSE 250 - Fallers

Raspberry PI Holdings (RPI) 386.50p -5.82%
Lion Finance Group (BGEO) 7,390.00p -5.26%
Future (FUTR) 694.00p -5.00%
Auction Technology Group (ATG) 333.50p -4.17%
Ocado Group (OCDO) 221.80p -3.94%
Bytes Technology Group (BYIT) 390.20p -3.65%
Bloomsbury Publishing (BMY) 475.50p -3.55%
Trustpilot Group (TRST) 229.00p -3.46%
Investec (INVP) 565.50p -3.33%
Clarkson (CKN) 3,540.00p -3.28%

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