London close: Stocks mixed in quiet pre-Christmas trading

(Sharecast News) - London's stock markets closed in mixed territory on Monday, after fresh official data revealed that the UK economy flatlined in the third quarter, fueling apprehensions about growth prospects.

The FTSE 100 index edged up 0.22% to close at 8,102.72 points, while the FTSE 250 slipped 0.15% to 20,419.09 points.

In currency markets, sterling was last down 0.33% on the dollar to trade at $1.2529, as it slipped 0.12% against the euro, changing hands at €1.2035.

"Despite seeing the largest daily rally since early November on Friday, the S&P 500 ended its second straight week in the red amid higher US yields," said IG senior technical analyst Axel Rudolph.

"Asian markets followed Friday's US' lead and mostly ended the day in positive territory but European and US markets didn't follow suit.

"The UK economy stalled in the third quarter, following a downward revision from +0.1%, and German import prices rose for the first time in three months."

Rudolph said that put a dampener on proceedings, despite a higher Chicago Fed national activity index reading.

"Another up leg in US yields not only put pressure on stock indices but also drove the greenback higher, as did a last-minute vote which prevented a US government shutdown over the festive season.

"US natural gas prices began the week where they left off last week by rallying to their highest level in over a year amid stronger global LNG demand bets but then slid back as these petered out.

"Gold, silver and oil prices were little changed on the day as trading volumes drastically declined."

UK economy stalls in third quarter, private sector bracing for tough new year

In economic news, the UK economy stalled in the third quarter, with no growth recorded, according to revised data from the Office for National Statistics (ONS).

That marked a downgrade from an earlier estimate of 0.1% growth.

The ONS also adjusted its second-quarter growth figure downward to 0.4% from 0.5%.

Sector-specific data showed stagnation in services, a 0.7% rise in construction, and a 0.4% decline in production, underscoring persistent challenges across the economy.

"The economy was weaker in the second and third quarters of this year than our initial estimates suggested with bars and restaurants, legal firms and advertising, in particular, performing less well," said Liz McKeown, director of economic statistics at the ONS.

"The household saving ratio fell a little in the latest period, though remains relatively high by historic standards.

"Meanwhile real household disposable income per head showed no growth."

UK private sector firms were meanwhile bracing for a difficult start to 2025, with expectations for activity in the first quarter falling to their lowest in over two years, according to the Confederation of British Industry (CBI).

The organization's latest growth indicator survey showed a weighted balance of -24% of firms expecting weaker activity, down from -10% last month.

Both services, at -18%, and manufacturing, at -31%, were anticipating contraction, with manufacturing outlooks at their most pessimistic since May 2020.

Private sector output, which had been stagnant or declining since mid-2022, dropped further in the three months to December, accelerating to -21% from -13% in November.

"There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds - firms expect to reduce both output and hiring, and price growth expectations are getting firmer," said Alpesh Paleja, the CBI's interim deputy chief economist.

"Businesses continue to cite the impact of measures announced in the Budget - particularly the rise in employer NICs - exacerbating an already tepid demand environment."

Across the Atlantic, US consumer confidence took a surprising turn downward in December, erasing gains made over the past two months.

The Conference Board's consumer confidence index fell to 104.7 from November's 112.8, confounding expectations of a slight improvement to 112.9.

That decline was driven by waning optimism about the future, as the expectations index plunged 12.6 points to 81.1, just above the 80-point threshold that often signals a potential recession.

The present situation index also dipped, reflecting concerns about the sustainability of recent economic momentum.

Direct Line rises as it agrees to be acquired by Aviva

On London's equity markets, Direct Line Insurance Group surged 4.03% after agreeing to a £3.75bn acquisition by Aviva, which edged up 0.52%.

The deal valued Direct Line shares at 275p each, representing a 73.3% premium to their 27 November closing price.

Aviva said it planned to cut costs by at least £125m annually through job reductions and improved operational efficiency, underscoring its strategy to capitalise on economies of scale.

"Christmas has come early for Direct Line investors, as Aviva's £3.7bn buyout has officially been signed, sealed, and delivered," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"The terms of the deal remain unchanged from what was floated to the markets earlier this month, and the festive confirmation has wrapped up what many investors had already baked into expectations, leaving little surprise under the tree.

"This deal strikes a balance that seems to deliver value for both parties - Direct Line has been navigating choppy waters, with its market share steadily eroding and a history of missteps from previous management leaving the ship off course."

Elsewhere, Frasers Group dropped 3.35% following its response to Boohoo Group's shareholder vote on Friday, where nearly 64% of investors rejected Frasers' proposed board candidates, including founder Mike Ashley.

Frasers, which holds a 28% stake in Boohoo, expressed respect for the decision but confirmed it would nominate an alternative candidate soon.

Boohoo shares rose 1.33% as the company announced the £49.5m cash sale of its London office, a move aligned with efforts to streamline operations.

Outside the main market, ITM Power gained 1.9% on AIM after securing a contract to supply three Neptune V units, delivering 15 megawatts of green hydrogen capacity, to a private German company.

The electrolysers, scheduled for deployment in the first half of 2026, would support hydrogen refuelling stations across Germany.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,102.72 0.22% FTSE 250 (MCX) 20,419.09 -0.15% techMARK (TASX) 4,590.32 0.24%

FTSE 100 - Risers

Airtel Africa (AAF) 108.60p 3.13% Smurfit Westrock (DI) (SWR) 4,245.00p 2.41% Centrica (CNA) 127.50p 2.04% Hikma Pharmaceuticals (HIK) 1,974.00p 1.79% Pershing Square Holdings Ltd NPV (PSH) 3,770.00p 1.73% AstraZeneca (AZN) 10,422.00p 1.62% Games Workshop Group (GAW) 13,210.00p 1.62% Land Securities Group (LAND) 575.00p 1.59% Croda International (CRDA) 3,397.00p 1.58% Beazley (BEZ) 818.50p 1.30%

FTSE 100 - Fallers

Spirax Group (SPX) 6,755.00p -2.81% Entain (ENT) 690.00p -2.49% Schroders (SDR) 307.60p -1.47% Diploma (DPLM) 4,244.00p -1.39% International Consolidated Airlines Group SA (CDI) (IAG) 301.60p -1.37% Experian (EXPN) 3,465.00p -1.23% Rentokil Initial (RTO) 394.90p -1.18% Ashtead Group (AHT) 4,978.00p -1.03% Weir Group (WEIR) 2,182.00p -1.00% Flutter Entertainment (DI) (FLTR) 20,910.00p -0.99%

FTSE 250 - Risers

Direct Line Insurance Group (DLG) 252.40p 3.78% Chrysalis Investments Limited NPV (CHRY) 105.40p 3.74% Indivior (INDV) 947.00p 3.55% SThree (STEM) 278.00p 2.96% Pantheon International (PIN) 320.00p 2.58% Pagegroup (PAGE) 340.40p 2.16% European Opportunities Trust (EOT) 785.00p 1.95% Victrex plc (VCT) 1,076.00p 1.89% Allianz Technology Trust (ATT) 422.00p 1.81% Ocado Group (OCDO) 310.40p 1.77%

FTSE 250 - Fallers

Oxford Nanopore Technologies (ONT) 128.50p -10.20% Bridgepoint Group (Reg S) (BPT) 345.60p -4.27% Moonpig Group (MOON) 212.00p -4.07% Frasers Group (FRAS) 605.50p -3.35% Hilton Food Group (HFG) 892.00p -2.62% Carnival (CCL) 1,838.50p -2.57% Elementis (ELM) 137.40p -2.41% PayPoint (PAY) 745.00p -2.23% AO World (AO.) 103.80p -2.06% Bloomsbury Publishing (BMY) 670.00p -2.05%