UK stocks recovered some earlier losses on Friday but finished in negative territory ahead of last-ditch Brexit talks with a decision expected one way or the other on Sunday.
Morgan Stanley said it expected the domestically focused FTSE 250 index to drop between 6%-to-10% in the event of a no deal. The pound fell 0.6% against the US dollar to $1.32.
Meanwhile US stimulus talks also dragged-on with a coronavirus stimulus package looking unlikely before Christmas.
At 16:30 the FTSE 100 was down 0.74% at 6,551 points.
FALLING BANKS
Banks were in focus after the regulator said it would allow lenders to restart capital pay-outs in the form of dividends and share buybacks.
However, any distributions by large banks for this year should be 'prudent' and fall within temporary 'guardrails' published by the Prudential Regulation Authority.
Shares were mixed, with Barclays (BARC) dipping 3.9% to 136p and NatWest Group (NWG) losing 6.9% to 150p while HSBC (HSBA) lost 0.4% to 402p and Standard Chartered (STAN) dropped 0.4% to 476p.
VACCINE DELAY
Shares in drug maker Glaxosmithkline (GSK) traded up slightly at £14.21 despite the announcement the firm was delaying its Covid-19 vaccine programme, run in conjunction with French pharmaceutical maker Sanofi, due to a weak response in elderly patents during Phase 1 and Phase 2 trials.
The ‘insufficient response’ in older adults means the vaccine needs refining with a higher concentration of the antigen ‘in order to provide high-level immune response across all age groups’. Glaxo doesn’t expect its drug to be available until the final quarter of next year assuming further trials are successful.
Aero engine maker Rolls-Royce (RR.) descended 7.5% to 117.5p after a trading update which showed the civil aerospace business was still suffering from the fall-out of travel restrictions with large-engine flying hours still almost 60% below 2019 levels.
The firm reaffirmed its target of turning cash-flow positive ‘at some point’ in the second half of next year and of generating at least £750 million of positive free cash flow the following year, but investors seemed unimpressed.
House builder Bellway (BWY) issued a more positive trading update, covering the 17 weeks from August to November, citing strong demand for new homes. Reservations were up 6% on the same period last year and the order book of close to 6,200 homes was valued at £1.77bn, an increase of nearly 19%.
The firm also raised its forecast for completions for the full year to July 2021 to around 9,400 homes, an increase of 25% on the previous year. Notwithstanding, shares drifted 2% lower to £27.07.
There was a more positive response to the latest trading update from London estate agency Foxtons (FOXT), which benefitted from the unlocking of the housing market with an 11% increase in house sales in the last two months.
The firm also announced a plan to buy back up to £3 million of shares as a reflection of its strong capital position. The shares gained 3.4% to 45.5p.
Shares in air-conditioning equipment maker Volution (FAN) jumped 13% to 289p after it revealed that earnings for the new financial year would be ‘significantly ahead of expectations’ thanks to strong organic growth and the firm hitting its 20% operating margin target a full eight months ahead of target.
Like-for-like sales rose by nearly 8% in Europe and 18% in Australasia thanks to new product launches and market share gains.
