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Pound suffers fresh falls after gloomy factory output figures

Published 07/09/2016

Sterling lost ground against the dollar
Sterling lost ground against the dollar

The pound suffered fresh falls after gloomy official figures showed UK factory output slid at its fastest rate in a year after the Brexit vote.

Sterling fell as much as 0.7% to 1.33 US dollars and dropped 0.5% to 1.186 euros after d ata from the Office for National Statistics (ONS) showed a sharp 0.9% month-on-month contraction in the manufacturing sector in July.

But the FTSE 100 closed 20.5 points higher at 6846.6 after struggling for direction for much of the session.

Across Europe, Germany's Dax and the Cac 40 in France both finished 0.6% higher.

The ONS manufacturing figures showed the Brexit-hit pound failed to boost factories by making British goods more attractive to overseas buyers.

There was some better news for overall industrial production output, which rose 0.1% on the month in July, defying expectations for a contraction.

The data comes after a private survey released earlier this week showed that the UK services sector swung back to growth in August after a contraction in July.

Speaking to MPs on the Treasury Select Committee, Bank of England governor Mark Carney claimed the August rate cut and stimulus package has helped support the economy, with some sectors having "bounced back" since the EU referendum.

In oil markets, Brent crude rose around 1 % to touch 47.81 US dollars per barrel, though investors were losing hope that Saudi Arabia and Russia would agree to a supply freeze that would help support prices.

Among stocks, Sports Direct International shares plunged after the company issued a profit warning, saying annual earnings would come in at £300 million, down from £381.4 million a year earlier.

The FTSE 250-listed stock finished lower by 8% or 30.3 to 319.3p.

The executive board of the embattled retailer also said Keith Hellawell would continue as chairman, despite having offered to step down.

Independent shareholders later vented their anger at Mr Hellawell, with 53% voting against his reappointment at the company's annual general meeting.

UK house builders led losses on the FTSE 100 Index after Halifax house price data showed 0.2% month-on-month drop in August.

Berkeley shares fell 3% or 85p to 2698p and sector peer Barratt Developments dropped 14.8p to 492.2p, despite assuring it was "business as usual" following the EU referendum.

Barratt said an under-supply of new homes was still helping to support the UK home-building sector, as it reported a 21% rise in full-year pre-tax profit to £682.3 million.

The biggest FTSE 100 risers were Ashtead Group up 42p to 1300p, Royal Dutch Shell ahead 37.5p to 1976p, Antofagasta 9.5p stronger at 512.5p and International Airlines Group 7.1p higher at 406p.

The biggest FTSE 100 fallers were Berkeley Group down 85p to 2698p, Barratt Developments off 14.8p to 492.2p, Taylor Wimpey 4.1p lower at 159.5p and Worldpay Group 7p weaker at 287.4p.

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