Source: Sharecast
The FTSE 100 was down 0.3% at 9,265.15, reversing earlier small gains.
The latest industrial trends survey from the Confederation of British Industry showed that output volumes fell in the three months to August, having been broadly flat in July.
The CBI's balance for manufacturing new orders fell to -33 from -30 in July. Meanwhile, the gauge for the volume of output expected in the next three months declined to -13 in August from -6 the month before.
Ben Jones, lead economist at the CBI, said: "Manufacturers report that rising costs are squeezing margins and leaving customers more cautious, which in turn is hitting orders and weighing on output. With weak demand compounded by trade frictions and policy uncertainty, the outlook for UK manufacturers remains challenging.
"As firms continue to cite, they are contending with a range of cost pressures from high energy costs to the additional burden from last year's Autumn Budget increase in employer NICs.
"Against this backdrop, the upcoming Autumn Budget is a pivotal moment to shore up business sentiment. The government must provide business tax certainty and further Growth and Skills Levy flexibility, accelerate industrial and infrastructure strategy implementation, and broaden support to tackle uncompetitive energy prices.
"The CBI stands ready to partner with the government to co-design the policies that will build a truly competitive, innovative, and prosperous UK economy."
Market participants were also digesting a survey that showed private sector business activity accelerated to its fastest pace in a year in August.
The S&P Global flash UK PMI composite output index - which covers both the manufacturing and services sectors - rose to 53.0 from 51.5 in July, coming above the 50.0 mark that separates contraction from expansion.
It also marked the strongest output growth since August 2024, with a faster rise in service sector activity more than offsetting another marginal decline in manufacturing production.
Service providers pointed to improved demand conditions, while goods producers put lower output down to a lack of new work and intense competitive pressures.
Finally, data from the Office for National Statistics showed that government borrowing was lower than expected in July.
Borrowing came in at £1.1bn, down £2.3bn on July 2024 and marking the lowest July figure for three years following tax rises in April. Analysts were expecting £2.6bn and the Office for Budget Responsibility had forecast £2.1bn.
Borrowing in the financial year to July rose £6.7bn to £60bn. This was the third-highest April to July borrowing since monthly records began, after those of 2020 and 2021.
Looking ahead to the rest of the day, Dan Coatsworth, investment analyst at AJ Bell, noted that the Jackson Hole meeting is set to get underway, "with all the focus on Federal Reserve chair Jerome Powell and what he has to say about interest rates".
He added: "While there have been signs of weakness in the US economy, inflation is proving to be relatively sticky and the Fed may feel the full impact of tariffs is not yet showing up in CPI readings."
In equity markets, Legal & General, Schroders, Mondi, Imperial Brands, Entain and Anglo American all fell as they traded without entitlement to the dividend.
WH Smith tanked as it cut its North America profit guidance after uncovering an overstatement of around £30m of expected trading profit.
For the year to the end of August, the group now expects headline trading profit from the North America division to be about £25m, down from previous market expectations of approximately £55m.
Full-year headline profit before tax and non-underlying items will be in the region of £110m, it said.
Recruiter Hays slumped as it more than halved its annual dividend after delivering a big drop in profits, as expected, over the year to 30 June, saying job markets have yet to recover in the new financial year.
Engineering firm Renishaw shot higher as it said full-year adjusted pre-tax profit was set to be towards the top of its £109m to £127m guidance range and announced the departure of group finance director Allen Roberts after 46 years with the company.
On the upside, Premier Inn owner Whitbread gained as Citi lifted its price target on the stock to 3,800p from 3,600p and reiterated its ‘buy’ rating, saying it sees a "compelling investment case" after the 29% share price increase since April.
Premier Foods rose after announcing the acquisition of convenient meals brand Merchant Gourmet for £48m.
Market Movers
FTSE 100 (UKX) 9,265.15 -0.25%
FTSE 250 (MCX) 21,782.63 -0.47%
techMARK (TASX) 5,391.92 0.54%
FTSE 100 - Risers
BAE Systems (BA.) 1,765.50p 2.23%
Flutter Entertainment (DI) (FLTR) 22,020.00p 2.13%
Babcock International Group (BAB) 994.50p 1.53%
Fresnillo (FRES) 1,670.00p 1.40%
Whitbread (WTB) 3,148.00p 1.32%
Prudential (PRU) 998.40p 0.65%
Rolls-Royce Holdings (RR.) 1,032.50p 0.63%
Rightmove (RMV) 777.00p 0.62%
Glencore (GLEN) 293.40p 0.58%
Weir Group (WEIR) 2,484.00p 0.57%
FTSE 100 - Fallers
Mondi (MNDI) 1,048.00p -2.60%
Legal & General Group (LGEN) 254.20p -2.46%
Coca-Cola HBC AG (CDI) (CCH) 3,914.00p -2.05%
Smurfit Westrock (DI) (SWR) 3,089.00p -2.00%
Schroders (SDR) 390.20p -1.96%
Entain (ENT) 872.20p -1.71%
Relx plc (REL) 3,571.00p -1.49%
Croda International (CRDA) 2,521.00p -1.45%
Rentokil Initial (RTO) 361.00p -1.37%
Barratt Redrow (BTRW) 372.90p -1.30%
FTSE 250 - Risers
Ithaca Energy (ITH) 211.75p 7.60%
Renishaw (RSW) 3,200.00p 7.56%
Diversified Energy Company (DEC) 1,165.00p 2.82%
QinetiQ Group (QQ.) 478.00p 2.01%
Helios Towers (HTWS) 126.00p 1.78%
Premier Foods (PFD) 190.00p 1.71%
Genus (GNS) 2,705.00p 1.50%
Auction Technology Group (ATG) 350.00p 1.45%
ICG Enterprise Trust (ICGT) 1,476.00p 1.37%
Avon Technologies (AVON) 1,966.00p 1.34%
FTSE 250 - Fallers
WH Smith (SMWH) 651.00p -41.35%
NextEnergy Solar Fund Limited Red (NESF) 69.90p -4.51%
Plus500 Ltd (DI) (PLUS) 3,026.00p -3.26%
Wizz Air Holdings (WIZZ) 1,349.00p -3.23%
XPS Pensions Group (XPS) 360.50p -2.57%
Lancashire Holdings Limited (LRE) 613.00p -2.54%
Lion Finance Group (BGEO) 7,460.00p -2.36%
Crest Nicholson Holdings (CRST) 169.60p -2.14%
Hays (HAS) 62.15p -2.13%
Ibstock (IBST) 139.00p -2.11%