The FTSE 100 was broadly unchanged by Friday lunchtime, shrugging off a disappointing reading of UK gross domestic product (GDP) growth, as the index was able to hold on to four-and-a-half-year highs.
London's benchmark index surged by over one per cent on Thursday following some better-than-expected manufacturing data from China and the US, and an improved composite purchasing managers' index in the Eurozone.
However, it was revealed this morning that the UK economy contracted by 0.3% during the fourth quarter of 2012, worse then the 0.1% GDP decline forecasted. Market chatter is now speculating that a 'triple-dip' recession could be on the cards, after the economy pulled out of a small 'double-dip' in the third quarter of 2012.
"After the stunning albeit distorted Q3 GDP figures last year, today's disappointing Q4 growth figures are a stark reminder of the poor condition of the UK's economy and the difficulty it will have to find the path of sustainable growth in the years ahead," said Andrew Edwards, the Chief Executive Officer of ETX Capital.
"The UK's economy relapsed again, entering a triple dip into negative growth, hurt by harsh austerity measures under the current government and the overall slowdown in the global economy in 2012."
UK economy "not a pretty sight"
Due to the erratic pattern of quarterly changes in GDP throughout 2012 - owing to the Olympics and the Diamond Jubilee celebrations - analyst Simon Hayes from Barclays Research said that there is little to be gleaned from the quarter-on-quarter movements and we should be looking at year-on-year comparisons. Thus, "a clearer picture of the state of the economy emerges, and it is not a pretty sight".
He said: "The level of GDP in Q4 12 was unchanged from that a year earlier. The construction sector has experienced a dramatic double dip, almost of comparable size to that when the global financial crisis first hit. UK industrial production is in steady decline, partly because of the trend deterioration in North Sea production but also because the manufacturing sector sunk back into recession, a development that cannot be solely attributed to the euro-area malaise, as UK exporters have also lost market share in non-EU markets.
"The service sector remains the sole source of growth, but even this is meek, at less than 1.5% compared with a pre-crisis average of around 4%."
He concluded that, against a backdrop of a weak outlook for household incomes and subdued exports, fiscal austerity means that any recovery "is likely to prove painfully slow".
FTSE 100: IAG, Polymetal flying high after upgrades
Airline IAG was a high riser this morning after JPMorgan Cazenove raised its rating for the stock to 'overweight'.
Meanwhile, Polymetal gained after UBS upgraded its recommendation from to 'buy' and hiked its price target by 11%. The broker said: "We think that now is the right moment to use weakness in the stock price as potential merger with Polyus Gold may be a strong driver."
Mining group Xstrata was also up after saying that the definitive estimate for the Las Bambas project in southern Peru is $5.2bn.
Other miners however slipped into the red, with EVRAZ, Rio Tinto and BHP Billiton among the worst performers early on.
Diversified miner Anglo American fell after admitting that strikes held back production of platinum and iron ore in the fourth quarter. Nevertheless, most other commodity classes delivered 'solid' increases in output.
FTSE 250: easyJet lifted by UBS upgrade
Shares in budget airline easyJet were higher after UBS raised its rating to 'buy' after yesterday's better-than-expected first-quarter results. The broker said that growth is gaining momentum with the company "becoming more positive on 1H performance".
Telecoms group Cable & Wireless Comms was lower after HSBC cut its rating to 'neutral'.
FTSE 100 - Risers
TUI Travel (TT.) 291.00p +3.19%
Sage Group (SGE) 325.40p +2.29%
International Consolidated Airlines Group SA (CDI) (IAG) 222.70p +1.97%
Polymetal International (POLY) 1,111.00p +1.93%
Aberdeen Asset Management (ADN) 412.70p +1.78%
CRH (CRH) 1,365.00p +1.71%
Smiths Group (SMIN) 1,247.00p +1.46%
Johnson Matthey (JMAT) 2,386.00p +1.40%
Intertek Group (ITRK) 3,133.00p +1.29%
ITV (ITV) 116.20p +1.13%
FTSE 100 - Fallers
Evraz (EVR) 299.40p -2.44%
Eurasian Natural Resources Corp. (ENRC) 332.30p -2.03%
Antofagasta (ANTO) 1,253.00p -1.73%
Rio Tinto (RIO) 3,521.00p -1.51%
Hargreaves Lansdown (HL.) 715.00p -1.45%
Fresnillo (FRES) 1,679.00p -1.41%
BHP Billiton (BLT) 2,108.50p -1.40%
Kazakhmys (KAZ) 759.50p -1.36%
Weir Group (WEIR) 2,012.00p -1.18%
Babcock International Group (BAB) 1,010.00p -1.17%
FTSE 250 - Risers
Enterprise Inns (ETI) 99.00p +4.21%
IP Group (IPO) 130.30p +3.99%
easyJet (EZJ) 932.00p +3.73%
UBM (UBM) 763.50p +2.55%
Daejan Holdings (DJAN) 3,073.00p +2.47%
Carpetright (CPR) 675.00p +2.20%
Provident Financial (PFG) 1,460.00p +1.96%
Spirent Communications (SPT) 153.80p +1.85%
Synthomer (SYNT) 198.00p +1.80%
Go-Ahead Group (GOG) 1,312.00p +1.71%
FTSE 250 - Fallers
London & Stamford Property (LSP) 112.30p -4.10%
Hochschild Mining (HOC) 423.70p -3.40%
ITE Group (ITE) 265.40p -2.93%
Stobart Group Ltd. (STOB) 98.50p -2.86%
Laird (LRD) 217.80p -2.51%
Petropavlovsk (POG) 379.70p -2.42%
Euromoney Institutional Investor (ERM) 930.50p -2.21%
Afren (AFR) 148.40p -1.98%
Phoenix Group Holdings (DI) (PHNX) 574.50p -1.79%
Balfour Beatty (BBY) 277.90p -1.35%