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ADVFN Morning London Market Report: Friday 8 December 2017

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London open: Stocks flat as pound gains on Brexit breakthrough

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London stocks were little changed in early trade on Friday as the pound ticked higher after a breakthrough in Brexit talks.

At 0840 GMT, the FTSE 100 was flat at 7,323.82 as the pound rose 0.5% against the euro to 1.1502 and 0.2% versus the dollar to 1.3503. A stronger pound tends to hold back the top-flight index as around 70% of its constituents derive most of their earnings from abroad.

European Commission President Jean-Claude Juncker said “sufficient progress” has been made in the first phase of Brexit talks and recommended that the talks move on to the next stage after both sides reached a preliminary agreement following a week of negotiations.

Prime Minister Theresa May said the deal would ensure there would be no hard border in Ireland, while EU citizens living in the UK will be able to go on living as before.

Juncker said the outcome of the first phase of talks was “of course a compromise” and that negotiations had been “difficult” for both sides. The text now needs to be signed off by leaders of the EU member states at a summit next week.

Oanda analyst Craig Erlam said: “There has been numerous times when an agreement looked difficult or even unlikely before year-end which would have made achieving a trade deal by March 2019 very tough. Today is a hugely significant step forward towards exiting the EU in 2019 and while both sides will be relieved at the progress, many more tough negotiations lie ahead. But we can’t underestimate how important today is.”

UK manufacturing and industrial production figures at 0930 GMT, along with the goods trade balance. Traders will also be looking ahead to the release of the non-farm payrolls report and unemployment rate in the US at 1330 GMT.

In corporate news, housebuilders got a boost as Berkeley Group said it now expects to generate pre-tax profit of £3.3bn in the five years to 2021, up from £3bn previously and reported a 36% jump in half-year profit. Berkeley surged 7%, with PersimmonBarratt DevelopmentsTaylor WimpeyBovis Homes and Bellway all in the black.

Hammerson, which announced on Thursday a £3.4bn takeover deal for rival Intu Properties, was boosted by an upgrade to ‘buy’ at Goldman Sachs, having fallen in the previous session.

Vodafone was higher after confirming the end of its merger talks with Melita, putting the blame on regulators in Malta.

International Airlines Group flew higher after saying that its subsidiary, British Airways, has decided to launch a flexible benefits scheme incorporating a new defined contribution pension scheme.

John Laing gained ground after it said total investment commitments to date were well ahead of its original guidance for 2017, while IP Group rose after saying that its portfolio company Mirriad, has successfully priced its IPO.

Halma was hit by a downgrade to ‘underweight’ at JPMorgan Cazenove.

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