(Sharecast News) - London stocks had extended gains by midday on Friday as investors mulled an unexpected contraction in the UK economy in January.
The FTSE was up 0.6% at 8,593.51 .
Russ Mould, investment director at AJ Bell, said: "The FTSE 100 looked set to end the week on a positive note, supported by sterling weakness after an unexpected drop in UK GDP.
"While Wall Street entered official correction territory overnight, Asian stocks shrugged off this weakness as Chinese authorities introduced measures aimed at boosting consumer spending. This helped give the mining sector in London a lift as investors looked for a knock-on impact on metals demand in a commodity-hungry economy.
"Gold hit a fresh record high on the latest tariff moves by the US, with threatened punitive levies on alcohol from the EU. Doubts about the Ukraine-Russia peace deal added to the uncertainty."
Figures released earlier by the Office for National Statistics showed that gross domestic product contracted by 0.1% in January following 0.4% growth in December, and versus expectations for 0.1% growth.
Production output fell by 0.9% on the month in January following a 0.5% increase in December 2024. This was due mainly to a 1.1% fall in manufacturing output.
ONS director of economic statistics Liz McKeown said: "The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.
"However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more."
Paul Dales, chief UK economist at Capital Economics, said the contraction in real GDP in January highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt.
"Overall, these figures don't do much to change our forecasts that the economy will grow by just 0.1 q/q (or perhaps 0.2% q/q) in Q1 and by only 0.7% in 2025 as a whole," he said. "With the prospect of higher taxes from April having left business sentiment on the floor and the global backdrop deteriorating, the economy is unlikely to strengthen much from here."
In equity markets, Melrose Industries was the standout performer on the FTSE 100 as Citi reiterated its 'buy' rating on the stock, saying it "presents a compelling investment opportunity".
Housebuilder Berkeley Group gained as it reaffirmed earnings guidance but said planned government regulatory changes were putting delivery of new homes under "significant" pressure.
Recruiter Hays surged after Exane BNP Paribas lifted the shares to 'outperform' from 'underperform'.
Ashmore was also sharply higher on the back of a broker note, as UBS upgraded shares of the emerging markets investment manager to 'buy' from 'neutral', saying it expects improving inflows.
Heat treatment and thermal processing services firm Bodycote tumbled as it delivered a cautious outlook as it presented its full-year results, with end markets remaining mixed after a "challenging" 2024, in which adjusted operating profits grew only 1.1% to 129m.
Burberry was in the red after JPMorgan Cazenove placed the shares on 'negative catalyst watch' into FY25 results on 19 May.
Market Movers
FTSE 100 (UKX) 8,593.51 0.60%
FTSE 250 (MCX) 19,848.20 0.81%
techMARK (TASX) 4,749.48 0.51%
FTSE 100 - Risers
Melrose Industries (MRO) 516.80p 4.15%
Anglo American (AAL) 2,333.50p 3.48%
Rolls-Royce Holdings (RR.) 793.60p 2.88%
Fresnillo (FRES) 924.00p 2.72%
easyJet (EZJ) 486.30p 2.64%
Kingfisher (KGF) 261.70p 2.55%
Glencore (GLEN) 320.35p 2.50%
BAE Systems (BA.) 1,629.00p 2.42%
Rio Tinto (RIO) 4,844.00p 2.41%
Schroders (SDR) 387.40p 2.27%
FTSE 100 - Fallers
Reckitt Benckiser Group (RKT) 4,941.00p -5.34%
Pershing Square Holdings Ltd NPV (PSH) 3,604.00p -1.85%
Haleon (HLN) 383.70p -1.44%
Spirax Group (SPX) 7,015.00p -1.34%
Imperial Brands (IMB) 2,763.00p -0.90%
Hikma Pharmaceuticals (HIK) 2,000.00p -0.79%
Pearson (PSON) 1,255.00p -0.79%
British American Tobacco (BATS) 3,166.00p -0.75%
Land Securities Group (LAND) 553.50p -0.72%
LondonMetric Property (LMP) 176.20p -0.68%
FTSE 250 - Risers
Hays (HAS) 83.85p 10.69%
Ashmore Group (ASHM) 162.30p 8.71%
Ferrexpo (FXPO) 78.50p 6.66%
Hochschild Mining (HOC) 237.50p 6.50%
Ocado Group (OCDO) 238.10p 4.75%
Pagegroup (PAGE) 333.00p 4.00%
Dr. Martens (DOCS) 54.90p 3.68%
Lion Finance Group (BGEO) 5,550.00p 3.54%
Savills (SVS) 938.00p 3.53%
Chemring Group (CHG) 409.50p 3.41%
FTSE 250 - Fallers
Bodycote (BOY) 587.00p -7.85%
Burberry Group (BRBY) 961.20p -3.88%
Aston Martin Lagonda Global Holdings (AML) 78.50p -2.85%
Bridgepoint Group (Reg S) (BPT) 328.00p -2.73%
Ithaca Energy (ITH) 129.70p -2.63%
Oxford Nanopore Technologies (ONT) 99.90p -1.87%
Raspberry PI Holdings (RPI) 579.25p -1.82%
4Imprint Group (FOUR) 4,055.00p -1.82%
Pennon Group (PNN) 408.00p -1.16%
Diversified Energy Company (DEC) 904.00p -1.15%
93.47 (1.09%)
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