The FTSE 100 closed lower after the strengthening pound pressed on the index following a bright morning driven by good performances from housebuilders.
London’s top flight closed 38.78 points lower at 7,571.92 at the end of trading on Wednesday.
It was a largely subdued trading session for blue-chip firms with exception to construction firms, as Berkeley’s plans for a £1 billion shareholder payout were welcomed by investors across the sector.
The UK housebuilder said it will pay out £500 million to shareholders in March this year and another £500 million a year later.
Berkeley led the FTSE 100 at the close of play after its shares jumped 226p to 5,412p as a result.
The announcement helped to boost its rivals in the sector, with Taylor Wimpey closing 2.1p higher at 216.4p, and Persimmon closing 24p higher at 3,001p.
Fiona Cincotta, analyst at City Index, said the “firmer pound and disappointing corporate updates” offset positivity among housebuilders and Wall Street traders to leave the FTSE in the red.
UK-oriented housebuilders were also optimistic over the stronger pound, which rose in value after the Confederation for British Industry’s latest manufacturing report highlighted rapidly improving business confidence.
Connor Campbell, financial analyst at Spreadex, said: “Sterling rose against the dollar and the euro, hitting two-week and two-month highs respectively, after the CBI industrial order expectations reading outperformed forecasts.
“Crucially that dragged the likelihood of a Bank of England rate cut next Thursday from 75% to a 50-50 toss-up. Hardly the best situation for the pound to be in … but it was enough for a currency looking for good news.”
The value of the pound increased 0.64% versus the US dollar at 1.313 and rose 0.63% against the euro at 1.184.
Meanwhile, the European markets were largely subdued, with the Dax continuing to tease around an all-time high for the index.
The German Dax increased by 0.05% while the French Cac moved 0.58% lower.
Across the Atlantic, the Dow Jones opened higher, returning to growth despite Treasury Secretary Steve Mnuchin’s comments that there is no hard deadline for the US and China to complete phase two of their trade talks.
In company news, Sainsbury’s dipped lower after chief executive Mike Coupe announced plans to step down from the role after six years.
Sainsbury’s said he intends to leave the company at the end of May, being replaced by retail and operations director Simon Roberts. Shares in the company fell 4.4p to 208p at the close of play.
Elsewhere, Ted Baker’s torrid spell continued, as the luxury retailer saw shares sink further after revealing a recent accounting blunder was almost three times as bad as they first thought. It closed 21.2p lower at 297.8p.
Shares in The Works jumped after its chairman, Dean Hoyle, purchased £586,000 worth of shares in the high street retailer. It closed 2.9p higher at 47.5p.
The price of oil dropped on the back of fears that current supply could be excessive. The price of a barrel of Brent crude oil fell 0.55% to 65.36 US dollars.
The biggest risers on the FTSE 100 were Berkeley, up 226p at 5,412p, Sage Group, up 28.6p at 762.6p, London Stock exchange Group, up 278p at 7,986p, and Aveva, up 140p at 5,170p.
The biggest fallers on the index were Tui, down 49p at 837p, NMC Health, down 80p at 1,407p, Burberry, down 113p at 2,150p, and Antofagasta, down 43p at 907p.