Early market roundup: Stocks down as UK GDP makes subdued recovery

London stocks opened mostly lower on Thursday, as multiple UK companies agreed to takeover deals, and despite the UK economy returning to slight growth as expected.

The FTSE 100 index opened down 55.39 points, 0.5%, at 10,460.53. The FTSE 250 was down 34.19 points, 0.2%, at 23,496.58, and the AIM all-share was up 0.23 points, marginally higher, at 765.97.

The Cboe UK 100 was down 0.5% at 1,039.27, the Cboe UK 250 was up 0.5% at 20,324.39, and the Cboe small companies was down 0.4% at 18,417.22.

The UK economy returned to modest growth in May, although the recovery remained subdued as the conflict in Iran continued to weigh on activity through higher prices and supply chain disruption.

According to the Office for National Statistics, gross domestic product rose 0.1% in May after contracting 0.1% in April, matching market expectations. A 0.3% expansion in the services sector offset declines of 0.5% in production and 0.8% in construction.

Over the three months to May, GDP grew 0.7%, easing slightly from an upwardly revised 0.8% increase in the three months to April.

However, analysts at ING cautioned that the recovery is unlikely to gather pace.

"Ongoing strength in UK monthly GDP fits a familiar pattern seen in recent years, with growth tending to outperform in the opening months of the year before losing momentum later on. We expect activity to slow into the summer," ING said.

In European equities on Thursday, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.5%.

The pound was quoted at USD1.3535 early Thursday, higher than USD1.3486 at the London equities close on Wednesday. Against the euro, sterling rose to EUR1.1794 from EUR1.1791 a day prior.

The euro traded at USD1.1447 early Thursday, lower than USD1.1472 late Wednesday. Against the yen, the dollar was quoted at JPY162.05 versus JPY162.13.

Diploma rose 4.2%, to the top of the FTSE 100, after reporting 15% organic revenue growth in the nine months to June 30. This was driven by a strong third quarter and continued momentum across its Controls and Seals businesses despite challenging Life Sciences markets, it said.

The company upgraded full-year guidance and now expects 14% organic revenue growth at constant currency, an operating margin of around 26.5%, and operating profit growth of about 42%, around 7% ahead of the analyst consensus of £454 million.

Diploma also said that its acquisitions completed so far this year will add around 6% to reported revenue growth and noted it has a strong acquisition pipeline and significant balance sheet capacity.

DCC rose 1.1% after extending the deadline for a consortium led by Energy Capital Partners and KKR to announce a firm takeover offer until July 27 after receiving an improved proposal.

The revised approach retains the 6,525 pence-a-share cash offer and proposed 147.22 pence final dividend, while adding a contingent payment of up to 125 pence per share linked to proceeds from the sale of Nexora.

Late on Wednesday, DCC had extended its deadline for an offer by a day to Thursday from Wednesday.

At the other end of the blue-chip index, Experian fell 5.3% despite reporting a "strong start" to its financial year.

First-quarter revenue for the three months to June 30 rose 10% on-year, or 8% at constant currency, while organic revenue increased 7%, in line with expectations.

The credit data and technology company said growth was driven by robust demand across its business-to-business operations, particularly in North America, although North American consumer services revenue fell following the wind-down of two large data breach contracts. It left full-year guidance unchanged.

On the FTSE 250, Ocado Group slumped 14% as North American grocers Kroger and Sobeys scale back their partnerships with the company.

Ocado reported pretax profit falling 90% to £17 million in the six months to the end of May despite revenue jumping 54% to £1 billion.

However, £354 million of that revenue came from compensation payments and accelerated fees following the closure of four automated warehouses previously operated with Kroger and Sobeys.

Excluding those fees, revenue from its technology solutions business fell by around two-thirds to £14 million.

Merger activity also dominated the session.

Rotork surged 67% to the top of the FTSE 250 after ABB agreed to acquire the flow control specialist for 506 pence per share in cash.

The deal values the Bath-based company at £4.14 billion on a fully diluted basis, a 73% premium to Wednesday's closing price.

The Swiss engineering group said Rotork's flow control and instrumentation business would complement its Automation division and strengthen its industrial automation offering.

Rotork's board unanimously recommended the offer, saying ABB's commitment to operate the business as a standalone division would benefit employees and other stakeholders.

Among smaller companies, Ramsdens climbed 14%.

The financial services provider and pawnbroker has agreed to a sweetened takeover by US pawnbroker FirstCash at 675 pence per share in cash, plus up to 9 pence per share in dividends, valuing the company at £229 million, or £232 million including dividends.

Gooch & Housego jumped 38% after agreeing to a cash acquisition by Arlington Capital Partners at 1,234.9 pence per share, including a 4.9 pence interim dividend.

The deal values the photonics technology company at £345.6 million on a fully diluted basis, with an enterprise value of £400.5 million.

Elsewhere in UK property, AEW UK REIT slipped 0.9% after confirming it is considering an all-share offer for Alternative Income REIT, whose shares rose 4.4%.

Under the proposal, Alternative Income shareholders would receive 0.725 new AEW UK REIT shares for each share held.

In other M&A moves outside the UK, Uber announced on Thursday it has agreed to acquire Delivery Hero SE for an equity valuation of nearly USD15 billion.

Outside the UK, Uber announced it had agreed to acquire Delivery Hero SE for an implied equity valuation of nearly USD15 billion.

Under the voluntary takeover offer, Uber will pay EUR41.50 per share, implying an equity valuation of USD14.8 billion, or USD13.7 billion after adjusting for Uber's existing stake. Uber shares were marginally higher in premarket trading in New York, while Delivery Hero fell 0.9%.

In Asia on Thursday, the Nikkei 225 index in Tokyo closed down 2.8%. In China, the Shanghai Composite ended down 1.9%, while the Hang Seng index in Hong Kong closed up 1.4%. The S&P/ASX 200 in Sydney closed marginally lower.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.6%.

The yield on the US 10-year Treasury was quoted at 4.57%, widening from 4.56%. The yield on the US 30-year Treasury was quoted at 5.10%, widening from 5.08%.

Pakistan said on Thursday it would continue encouraging the US and Iran to resume technical talks under the memorandum of understanding it helped broker last month, despite renewed fighting.

Islamabad also called for an early normalisation of the situation in the Strait of Hormuz and stressed the importance of maintaining freedom of navigation through the strategic waterway. Brent crude traded at USD84.48 a barrel early Thursday, up from USD83.71 late Wednesday.

Gold was quoted at USD4,028.10 an ounce early Thursday, lower than USD4,048.39 on Wednesday.

Back in the UK, the government confirmed that British Steel has been brought into public ownership after the Steel Industry (Nationalisation) Act 2026 received royal assent.

The move is intended to safeguard steel production at the company's Scunthorpe site and protect UK supply chains, with a new leadership team appointed to stabilise the business and oversee its transition into a commercially sustainable, low-carbon enterprise.

Still to come on Thursday's economic calendar, the eurozone releases trade balance figures, while the US reports weekly jobless claims, retail sales and pending home sales.

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