London midday: FTSE extends gains after trio of encouraging economic releases

(Sharecast News) - London stocks had extended gains by midday on Friday despite growing tensions between the US and Iran, as investors mulled a trio of encouraging UK data releases.

The FTSE 100 was up 0.6% at 10,694.78.

Figures released earlier by the Office for National Statistics showed the government recorded its highest surplus in January since records began in 1993, handing a welcome boost to Chancellor Rachel Reeves ahead of the Spring Budget.

The surplus came in at �30.4bn, above expectations of �24bn and double the figure from January 2025. It was also �6.3bn above the Office for Budget Responsibility's November 2025 forecast.

Borrowing in the financial year to January 2026 was �112.1bn, down 11.5% on the same period a year earlier, but still the fifth-highest April to January borrowing on record.

ONS chief economist Grant Fitzner said: "January - which is traditionally a strong month for self-assessed tax receipts - saw the highest surplus since monthly records began.

"Revenue was strongly up on the same time last year, while spending was little changed, due to lower debt interest payments largely offsetting higher costs on public services and benefits.

"Across the first ten months of the current financial year, borrowing is lower than the same period a year ago."

Separate data from the ONS showed that retail sales rose 1.8% on the month in January following a 0.4% increase in December and comfortably beating expectations for 0.2% growth. On a yearly basis, sales were up 4.5%, ahead of expectations for a 2.8% jump.

Fitzner said: "Retail sales rose slightly in the latest three months, as sales continued to pick up in the new year following a weak November.

"Motor fuel sales increased a little across the period, while sales of art works, tech retailers and furniture stores also performed well. These were partially offset by falls in supermarket sales."

Investors were also digesting a survey showing that activity in the UK private sector grew in February at its fastest pace in nearly two years.

The S&P Global flash composite output index ticked up to 53.9 from 53.7 in January, marking the fastest rise in private sector activity since April 2024. A reading above 50.0 indicates expansion, while a reading below signals contraction.

This was driven by a sharper expansion of manufacturing production than at the beginning of 2026. S&P Global service sector output growth eased fractionally since January, but continued to outpace that seen in manufacturing.

Despite the upbeat tone in markets, geopolitical tensions were in focus after US president Donald Trump gave Iran a deadline of 10 to 15 days to make a deal over its nuclear program or "bad things" would happen.

At the inaugural meeting of his Board of Peace in Washington, Trump said Iran needed to reach a "meaningful" agreement with the US amid a massive US military buildup in the Middle East. "It's proven to be over the years not easy to make a meaningful deal with Iran - we have to make a meaningful deal otherwise bad things happen," he said.

Richard Hunter, head of markets at Interactive Investor, said: "There is some debate as to whether the rhetoric from the White House is another example of the President's tendency to shoot from the hip, or whether some kind of military intervention is actually possible given that the US is beginning to amass forces in the region.

"In any event, given Iran's access to the transportation of oil, a further surge in crude resulted in the price having risen by 18.5% in the year to date, while gold rose once more given its defensive asset status."

In equity markets, British Gas owner Centrica was the top riser on the FTSE 100, having tumbled on Thursday after saying it was pausing its share buyback programme as it reported a decline in full-year operating profit, with guidance from the energy firm also disappointing.

Drinks firm Diageo fizzed higher ahead of interim results next Wednesday, while Burberry shares sparked as Italy's Moncler - famous for its puffer jackets - reported better-than-expected full-year results.

Banks were also in the black after the flurry of encouraging data releases, with Barclays and Lloyds both higher.

Anglo American gained as it reported a slight rise in annual earnings as higher copper prices offset a 10% decline in production of the metal due to lower grades and plant maintenance while continuing tough conditions at its De Beers diamond unit also weighed on earnings.

St James's Place was boosted by an upgrade to 'buy' at UBS, while BlackRock Smaller Companies Trust rallied on news it's planning to merge with BlackRock Throgmorton Trust.

On the downside, Chemring slumped after saying it had a slower-than-expected start to the year, mainly due to some operational disruption in countermeasures production.

Aston Martin Lagonda fell as it said it was planning to sell the naming rights to its Formula 1 team for �50m to boost its liquidity, and warned its annual loss would be worse than expected, partly due to US tariffs.

Market Movers

FTSE 100 (UKX) 10,694.78 0.64%

FTSE 250 (MCX) 23,707.63 0.57%

techMARK (TASX) 6,144.12 0.38%

FTSE 100 - Risers

Centrica (CNA) 191.00p 2.74%

Diageo (DGE) 1,828.50p 2.64%

Burberry Group (BRBY) 1,204.50p 2.55%

Barclays (BARC) 477.25p 1.99%

Fresnillo (FRES) 3,940.00p 1.91%

Lloyds Banking Group (LLOY) 103.95p 1.91%

Admiral Group (ADM) 2,880.00p 1.77%

British Land Company (BLND) 420.20p 1.74%

Prudential (PRU) 1,132.00p 1.62%

Aviva (AV.) 651.80p 1.40%

FTSE 100 - Fallers

Smurfit Westrock (DI) (SWR) 3,706.00p -2.14%

BP (BP.) 471.60p -1.54%

Relx plc (REL) 2,284.00p -0.39%

LondonMetric Property (LMP) 212.60p -0.37%

BAE Systems (BA.) 2,157.00p -0.28%

Hikma Pharmaceuticals (HIK) 1,636.00p -0.24%

Rentokil Initial (RTO) 461.30p -0.24%

ICG (ICG) 1,724.00p -0.23%

easyJet (EZJ) 474.70p -0.17%

Reckitt Benckiser Group (RKT) 6,446.00p -0.15%

FTSE 250 - Risers

AEP Plantations (AEP) 1,575.00p 3.96%

TBC Bank Group (TBCG) 4,470.00p 3.95%

Ibstock (IBST) 136.60p 3.80%

Ceres Power Holdings (CWR) 303.80p 3.69%

Energean (ENOG) 899.50p 3.45%

BlackRock Smaller Companies Trust (BRSC) 1,420.00p 3.35%

Pan African Resources (PAF) 166.80p 3.09%

Hochschild Mining (HOC) 745.00p 2.34%

Baltic Classifieds Group (BCG) 186.00p 2.20%

CMC Markets (CMCX) 333.00p 2.15%

FTSE 250 - Fallers

Ithaca Energy (ITH) 198.20p -3.55%

Chemring Group (CHG) 505.00p -3.26%

Oxford Nanopore Technologies (ONT) 130.80p -1.80%

Pacific Horizon Inv Trust (PHI) 928.00p -1.59%

Playtech (PTEC) 343.00p -1.58%

Diversified Energy Company (DI) (DEC) 1,024.00p -1.54%

Aston Martin Lagonda Global Holdings (AML) 58.75p -1.43%

Raspberry PI Holdings (RPI) 376.40p -1.41%

Carnival (CCL) 2,359.00p -1.09%

Bytes Technology Group (BYIT) 292.60p -1.08%