London midday: Stocks stay up after manufacturing data; oil giants come off highs

(Sharecast News) - London stocks were still firmer by midday on Monday as investors mulled the latest reading on the UK manufacturing sector, although energy names were off their earlier highs.

The FTSE 100 was up 0.2% at 9,732.46, with all eyes on this week's policy announcement from the Bank of England.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Rates are widely expected to stay at 4% on Thursday, but the real debate is whether policymakers deliver a cut in December, with odds hovering near 50-50. With stubborn inflation and slowing growth, expectations for the year ahead are in the balance."

A survey out earlier showed that British manufacturing output ticked higher in October despite ongoing weakness across global markets.

The S&P Global UK manufacturing purchasing managers' index rose to a 12-month of 49.7 in October, up from 46.2 in September. It was the first time in a year that output has risen, although it remains narrowly in negative territory.

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

The uplift was attributed to depleted backlogs of work, increased stocks and, for certain respondents, Jaguar Land Rover restarting production.

The country's largest car manufacturer - which supports an extensive supply chain in the UK - was forced to shutter its factories in September following a cyberattack.

However, market conditions remained "tough", respondents noted, weighed down by weak demand in both domestic and overseas markets, stiff competition and ongoing tariff uncertainty.

The level of new export orders declined for the 45th month in a row.

Rob Dobson, director at S&P Global Market Intelligence, said October's rise in output was "positive".

However, he warned: "There are real concerns that the bounce could prove short-lived.

"Not only did October see auto sector supply chains benefit from the production restart at JLR - which will provide only a temporary spike in production - but sluggish demand meant October's output growth was dependent on firms eating into backlogs.

"Manufacturers seem stuck in a holding pattern until the domestic policy and geopolitical backdrops exhibit greater clarity."

In equity markets, BP and Shell came off earlier highs, having shot up in early trade after Opec+ paused planned production increases for next year.

Britzman said: "Brent crude oil climbed to $65.10 a barrel this morning, marking a fourth straight day of gains as OPEC+ signalled it will pause production hikes in early 2026 after a modest boost in December. The move eases fears of oversupply, while fresh US sanctions on Russian oil majors and weekend drone strikes on key infrastructure add geopolitical risk to the mix."

Elsewhere, homeware retailer Dunelm gained after RBC Capital Markets upgraded to the shares to 'outperform' from 'sector perform'. It said the stock has de-rated by 2-3 P/E turns over the past two years, given a stable profit trend and concerns over maturity.

"However, we think it should now see an acceleration in growth, driven by market share gains and gross margin improvement.

"The shares have lagged the sector despite DNLM's improving outlook. Hence, we see an opportunity here and upgrade Dunelm to outperform."

Industrial safety equipment maker Intertek nudged up after saying it had bought Suplilab, a provider of food safety and medical devices testing services, based in San Jos�, Costa Rica for an undisclosed sum.

On the downside, Vodafone was knocked lower by a downgrade to 'sell' at UBS.