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FTSE 100 lower ahead of GDP data GDP data triggers brief spike in pound
(about 3 hours later)
(Open): London's benchmark share index opened lower as investors waited for the latest GDP figures, the first to cover the period after the Brexit vote. Stronger-than-expected UK growth figures sparked a rally in the pound, but the gains did not last for long.
Growth in the UK economy is expected to have slowed from the rate of 0.7% seen in the second quarter. The latest GDP figures indicated that the economy grew by 0.5% in the third quarter of the year, better than analysts' forecasts of 0.3%.
Shortly after trading began, the FTSE 100 index was down 19.84 points at 6,938.25. In response, the pound hit a one-week high against the dollar to $1.2273 as the chances of another rate cut by the Bank of England appeared to diminish.
"There is a palpable nervousness around the UK markets this morning," said Connor Campbell of SpreadEx. However, sterling then fell back to $1.2221, down 0.2% for the day.
"Analysts are expecting growth to drop to 0.3% or 0.4% for the third quarter, roughly half of what was managed in Q2; any movement around those estimates could cause a big reaction." Against the euro, the pound was down 0.3% at €1.1197.
Shares in Barclays dipped 0.2% after the bank reported a rise in third-quarter profits but set aside a further £600m to cover PPI mis-selling claims. On the stock market, the FTSE 100 rose ahead of the GDP data, but then fell back to stand 11.12 points lower at 6,946.97 by late morning.
On the currency markets, the pound fell 0.3% against the dollar to $1.2208 and dropped 0.4% against the euro to €1.1185. Shares in Barclays were 1.3% higher after the bank reported a rise in third-quarter profits. Barclays also set aside a further £600m to cover PPI mis-selling claims.
BT fell 3.4% after the telecoms group - which recently acquired mobile firm EE - reported its latest results. Adjusted revenues in the second quarter rose 1.1% to £6bn, with pre-tax profits up 24% to £873m.
Shares in Debenhams rose 3% despite the department store group reporting a 10% drop in full-year profits to £101.7m.