(Sharecast News) - London stocks were still a touch weaker by midday on Thursday as investors digested lacklustre UK GDP figures, with Whitbread under the cosh after disappointing interim results.
The FTSE 100 was down 0.1% at 9,418.07.
Data released earlier by the Office for National Statistics showed that the economy expanded modestly in August, supported by the dominant services sector.
GDP grew by 0.3% in the three months to August, in line with expectations and a slight increase on the 0.2% uplift seen in July.
Within that, services output grew by 0.4%, unchanged on July, while construction output rose 0.3%.
Production output was lower, falling 0.3%. But it was a notable improvement on July's downwardly revised 1.4% slide.
On a monthly basis, GDP rose 0.1%, following a 0.1% fall in July, and by 1.3% year-on-year.
Liz McKeown, director of economic statistics at the ONS, said: "Services growth held steady, while there was a smaller drag from production than previously.
"Continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer-facing services, while wholesalers also fared poorly."
The figures for July were revised downwards, with the ONS saying the economy shrank 0.1%, down from an initial estimate of no growth.
Russ Mould, investment director at AJ Bell, said: "Rachel Reeves might be reaching for a buck's fizz after the UK economy showed growth in August after contracting in July. However, the celebration may be short lived as a 0.1% expansion is minuscule and lower than the 0.2% growth expected by some economists.
"We're just six weeks away from the Chancellor's Budget and the nation is eager to know how Reeves plans to get the country moving while also repairing the black hole in public finances.
"A lot of people view the UK as being in a difficult spot - lacklustre growth and a weak financial position. The outlook is far from rosy and there is a big risk that tax tweaks could further dampen consumer and business sentiment.
"The FTSE 100 was flat in early trading as strength in utilities and energy was offset by weakness in consumer cyclicals and healthcare."
In equity markets, Premier Inn owner Whitbread tumbled as it downgraded its full-year profit outlook for Germany and posted a drop in interim profits and revenue.
In the 26 weeks to 28 August, adjusted pre-tax profit fell 7% from the same period a year earlier to 316m, while revenue dipped 2% to 1.5bn.
Whitbread said the profit figure reflects broadly flat UK total accommodation sales and positive momentum in Germany, offset by expected lower food and beverage sales due to the continued implementation of its 'Accelerating Growth Plan'.
The company downgraded its FY26 adjusted pre-tax profit for Germany to "up to 5m", from previous guidance of between 5m and 10m. It pointed to a softer market performance in the second quarter as there was a lower number of high-impact events this year.
AJ Bell's Mould said: "Whitbread shareholders will be wondering if Premier Inn's 'good night sleep or your money back' guarantee extends to investors, judging by yet another weak performance.
"Earnings in reverse, higher net debt, and a downgrade to forward profit guidance is the kind of news that makes investors suffer from insomnia.
"The fact Premier Inn is struggling to make decent progress in the UK suggests market conditions remain unfavourable for the hospitality industry.
"There are reasons not to lose hope. Trading has picked up recently in both the UK and Germany, and the group continues to take market share. Unfortunately for the company, the negative share price reaction to its latest results suggests investors lack faith in Whitbread bouncing back any time soon."
Elsewhere, building materials group Travis Perkins slumped despite reporting a return to underlying sales growth in its third quarter, as actions taken to "sharpen the competitive proposition" in its merchanting operations paid off.
Flexible workspace operator Workspace Group fell as it posted a 2.3% decline in like-for-like occupancy, dropping to 80% in the second quarter, largely due to customer vacations at The Centro Buildings.
Persimmon, Howden Joinery, Games Workshop, Coats Group and ITV all fell as they traded without entitlement to the dividend.
On the upside, Croda International gained as it reiterated its full-year outlook after the speciality chemicals group posted a jump in third-quarter sales.
Centrica was boosted by an upgrade to 'overweight' from 'equalweight' at Barclays, which upped the price target to 210p from 180p, to reflect increased confidence in the company's upside potential.
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