London's FTSE 100 down 0.2 per cent, sterling up 1.1 per cent

London's FTSE 100 was down 0.2 per cent at 0951 GMT, with sterling up 1.1 per cent, its fourth highest rise in the last 12 months after reports a deal giving London-based financial services access to European Union markets after Brexit was nearly done.

UK shares underperformed their European peers on Thursday despite upbeat trading updates from BT and Smith & Nephew as optimistic news on Brexit led to a surge in the pound which acts as an accounting drag on blue chips' foreign revenues.

London's FTSE 100 was down 0.2 per cent at 0951 GMT, with sterling up 1.1 per cent, its fourth highest rise in the last 12 months after reports a deal giving London-based financial services access to European Union markets after Brexit was nearly done.

Another drag to the British benchmark was oil prices falling and pushing index heavyweights BP and Royal Dutch Shell down by 2.4 per cent and 2.3 per cent respectively.

The latter reported soaring but below consensus profits in the third quarter.

"The FTSE was forced to give back some of its Halloween rallies," said Connor Campbell, an analyst at Spreadex, referring to the previous session's gains.

Data showing that British factories suffered their worst month since just after 2016's Brexit vote in October did little to lift morale.

Among Thursday's fresh batch of third-quarter earnings also came encouraging news for equity investors. Broker Bernstein called BT's figures "stellar".

BT's outgoing boss said the group's recovery plan was delivering after more sales of high-end smartphones and cost savings across the business helped the telecoms company achieve higher-than-expected first-half earnings.

"Overall the results are solid with steady improvements in the underlying trends", Citi analysts also commented.

Another clear winner of the early session was medical equipment maker Smith & Nephew which jumped 7 per cent after saying it expects its trading profit margin to be higher this year than last on a better performance for its hips.

"This is a particularly strong performance in hips, suggesting the company is taking share," analysts at Investec wrote.

Miner BHP Billiton rose 2.5 per cent after it said it would buy back shares and pay a special dividend to return $10.4 billion to shareholders, sticking to a promise to hand back all of the proceeds from the sale of its U.S. shale business.

Just Eat was also among the top performers, rising 3.8 per cent with better-than-expected orders and expectations that 2018 revenues will be towards the top end of its 740 million pounds ($952 million) to 770 million pound range.