UK midcaps inch higher on signs of global economic rebound

Data on Friday showed about 46% of UK manufacturers are expecting to lay off workers over the next six months. "If more nations start reintroducing lockdown measures, this may result in a second hit to the global economy and force investors to again reduce their risk exposures," Pissouros said.

UK midcaps edged higher on Friday as a pickup in China's services sector activity in June bolstered hopes of an economic rebound from a coronavirus-led downturn, although a record surge in the U.S. COVID-19 cases kept optimism in check. The domestically-focussed FTSE 250 rose 0.3%, on track for a weekly gain, as data showed China's services sector expanded at its fastest pace in over a decade last month. The final figures on the UK's services sector for June are due later in the day.

But the blue-chip FTSE 100 fell 0.1%, with BP Plc and Royal Dutch Shell Plc being among the biggest drags, as the resurgence in COVID-19 cases raised the specter of further lockdowns and hit oil prices. "(There is an) the ongoing battle between those who see a faster-than-thought economic recovery and those who are concerned with a second round of restrictions due to the re-acceleration of global infections" said Charalambos Pissouros, market analyst at JFD Group.

UK stock markets have rebounded sharply from a coronavirus-driven crash in March, helped by the historic stimulus, and, more recently, data signaling the worst of the pandemic's economic damage might be over. But analysts have warned of another selloff in financial markets as business sentiment remains fragile. Data on Friday showed about 46% of UK manufacturers are expecting to lay off workers over the next six months.

"If more nations start reintroducing lockdown measures, this may result in a second hit to the global economy and force investors to again reduce their risk exposures," Pissouros said. Retailer Next fell 2.6% after Goldman Sachs downgraded the stock to "sell", while AB Foods slipped 1.8% after the U.S. bank cut its rating on the stock to "neutral".

Land Securities rose 1.2% after it said like-for-like sales at its shopping centers were at 80% of the level achieved last year in the two weeks since non-essential retail reopened in England.