London midday: FTSE pares gains; UK private sector growth slows

(Sharecast News) - London stocks had pared gains by midday on Wednesday after a survey showed that growth in the UK private sector slowed in September, with Brent crude remaining below $100 a barrel on hopes of progress in US-Iran talks.

The FTSE 100 was up 0.1% at 10,715.47, while Brent crude was down 0.2% at $99.02 a barrel and West Texas Intermediate was off 1% at $89.66 following news that US and Iranian officials have held their first talks in months, through mediators, on the sidelines of the UN Summit.

US President Trump said on Tuesday that Iranian officials held "very good" three-hour talks with US special envoy Steve Witkoff on the sidelines of the assembly and that there would be another meeting in the "very near future".

In his comments to the general assembly, Trump also said he was faced with a choice of making a deal with Iran that would let the country rebuild or "annihilate" it if no deal is reached. "Do I drive them into hell with no chance of survival and no hope of future greatness or generations?" he said.

"There are two options; one could be a very bad thing, and the other could lead to greatness and progress for this country. Therefore, I think they want to do this."

Dan Coatsworth, head of markets at AJ Bell, said: "Oil's slow but steady retreat below $100 has been welcomed by investors, helping to give European equity markets a lift.

"Positive feedback from a meeting between US and Iranian representatives helped to calm markets, even though Donald Trump made more threats regarding military action.

"Oil resuming a downward trend is the market's way of saying it is slowly starting to believe that energy supplies will flow again, and that there is a potential resolution to the conflict in the Middle East. It's too early to see any radical changes to interest rate expectations, but investors will be hoping central banks soon have fewer reasons to raise the cost of borrowing by a significant amount."

On home shores, a survey showed the pace of private sector growth slowed in September, while inflationary pressures continued to mount.

The flash S&P Global UK PMI composite output index came in at 51.7, down on August's 52.5 and below consensus expectations of 52.0.

Within that, the services PMI business activity index slipped to a three-month low of 51.7, while the manufacturing output index fell to 51.4, the lowest print for six months. Only the manufacturing PMI showed an increase, rising to 52.0 from 51.7.

A reading above the neutral 50.0 benchmark indicates growth, while one below it suggests contraction.

The rate of input price inflation, meanwhile, accelerated for the second month in a row and now stands at the highest point since June. Respondents pointed to price hikes across energy, fuel and raw materials.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs continuing to discourage hiring.

"While the upturn in the survey's price gauges suggests the Bank of England looks likely to keep a hawkish bias, the worryingly lacklustre pace of business growth underscores the risk to the economy from higher borrowing costs."

Investors were also mulling an upgrade to the OECD's UK growth forecast for this year, but a downgrade to its projection for next year. The Paris-based organisation now expects the economy to grow 1.1% in 2026, up from a forecast of 0.9% growth in June. For 2027, however, it now expects growth of 1%, down from 1.1% previously.

On the corporate front, Rentokil was the top performer on the FTSE 100 as Investec upgraded the stock to 'buy' from 'hold'.

Pollen Street surged as it confirmed it is considering a potential sale, having begun an assessment of the strategic options available to it "with a view to delivering greater value for shareholders". Responding to press speculation, the asset manager said it has initiated preliminary discussions with a limited number of third parties to establish their suitability as a strategic partner and whether they might be interested in making a possible offer for the company.

Specialist engineer Renishaw rallied as it posted a 27% rise in annual profit driven by accelerating demand in several markets, including the semiconductor and aerospace and defence sectors. Pre-tax profit for the 12 months to 30 June came in at £150m, while revenue rose 14% to £816m. Renishaw said the current year had started strongly on increased demand for semiconductor manufacturing equipment.

Clean energy specialist Ceres Power rose as it reiterated its outlook despite a fall in half-year gross profits.

Diageo shares were little changed as the drinks business said that Joanne Wilson will join the group as chief financial officer in 2027, succeeding Nik Jhangiani. Wilson, who currently serves as CFO of WPP, has previously held senior financial and commercial roles at Britvic, datascience firm dunnhumby, Tesco and KPMG.

On the downside, JD Sports Fashion fell as it posted a slide in half-year earnings as it warned that the tough conditions seen in the first half were set to continue. The retailer reported a 0.7% decline in sales to £5.9bn in the 26 weeks to 1 August, with like-for-like sale down 2.8%. Operating profits were 20.5% lower at £294m.

The group called it a "resilient" performance amid a challenging backdrop, including cost-of-living pressures, footwear product cycle headwinds and widespread promotional activity. But it acknowledged that a number of these conditions were likely to persist into the second half.

Elsewhere, shares of online marketplaces and telecoms operators were under the cosh amid worries about the threat from new agentic AI tools. Autotrader, Mony Group, Rigtmove, Baltic Classifieds and Auction Technology all fell.

Market Movers

FTSE 100 (UKX) 10,715.47 0.07%

FTSE 250 (MCX) 24,452.78 -0.30%

techMARK (TASX) 6,161.50 -0.19%

FTSE 100 - Risers

Rentokil Initial (RTO) 324.40p 2.56%

Standard Chartered (STAN) 2,294.00p 1.32%

London Stock Exchange Group (LSEG) 8,248.00p 1.23%

Lion Finance Group (BGEO) 14,120.00p 1.22%

BP (BP.) 548.10p 1.03%

SSE (SSE) 2,489.00p 0.93%

Kingfisher (KGF) 345.80p 0.90%

Burberry Group (BRBY) 1,032.50p 0.88%

Halma (HLMA) 3,610.00p 0.84%

InterContinental Hotels Group (IHG) 155.00p 0.68%

FTSE 100 - Fallers

Autotrader Group (AUTO) 466.90p -3.78%

JD Sports Fashion (JD.) 76.38p -2.97%

Melrose Industries (MRO) 477.40p -1.97%

St James's Place (STJ) 1,095.50p -1.97%

IG Group Holdings (IGG) 1,339.00p -1.83%

Spirax Group (SPX) 7,175.00p -1.78%

Vodafone Group (VOD) 123.40p -1.36%

Barratt Redrow (BTRW) 305.20p -1.23%

AstraZeneca (AZN) 12,512.00p -1.20%

Tesco (TSCO) 476.20p -1.16%

FTSE 250 - Risers

Pollen Street Group Limited (POLN) 928.00p 13.74%

Ceres Power Holdings (CWR) 455.60p 6.20%

Hays (HAS) 65.00p 2.94%

Renishaw (RSW) 5,690.00p 2.80%

RHI Magnesita N.V. (DI) (RHIM) 2,905.00p 2.11%

NCC Group (NCC) 136.40p 1.79%

Syncona Limited NPV (SYNC) 118.00p 1.72%

AEP Plantations (AEP) 206.50p 1.72%

Raspberry PI Holdings (RPI) 619.25p 1.60%

Foresight Environmental Infrastructure Limited (FGEN) 89.80p 1.58%

FTSE 250 - Fallers

Mony Group (MONY) 182.30p -5.41%

Auction Technology Group (ATG) 434.40p -3.17%

Softcat (SCT) 1,852.00p -3.03%

Baltic Classifieds Group (BCG) 2.21p -2.91%

Rightmove (RMV) 470.60p -2.89%

Rank Group (RNK) 79.90p -2.44%

BH Macro Ltd. GBP Shares (BHMG) 411.50p -2.26%

Partners Group Private Equity Limited. (EUR) (PEY) 6.82p -2.01%

Close Brothers Group (CBG) 387.80p -1.97%

THG (THG) 26.86p -1.90%