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Blue chip shares were dragged lower as the UK government turned in a smaller budget surplus than expected last month Reuters

The London market struggled for direction this week as the UK government turned in a smaller budget surplus than expected in July. The FTSE 100 Index fell 16.5 points to 6852.4, after public sector net borrowing was in surplus by £1bn for the month, less than the £1.2bn seen a year earlier, and behind the £1.9bn economist's had expected.

In the FTSE 250 Index shares fell 3.4 points to 17867.7.

The public finances typically rack up a surplus in July, due to a rush of corporation tax revenues coming in at that time.

IG market analyst Joshua Mahony added that trading on the market has been subdued all week. He said: "This has been somewhat of an indecisive week for financial markets, with holiday season meaning that trading is thin and lacking any clear directional bias."

In the second tier, bookmaker William Hill's shares rose as much as 5% after rivals Rank and 888 abandoned their attempt to merge with the larger firm in a complex three-way tie-up. The two companies said they had not been able to "meaningfully engage" with William Hill's board.

William Hill lifted 13.2p to 316.2p, Rank rose 1.9p to 223.5p, while 888 Holdings was also 8.8p higher at 213.8p.

In afternoon trading the biggest risers on the FTSE 100 Index were EasyJet (+21p to 1099p), Centrica (+2.3p to 236p), Morrisons (+1.5p to 193.7p), Fresnillo (+15p to 1952p) and BAE Systems (+3.5p to 531p).

The biggest fallers on the FTSE 100 Index were Standard Chartered (-14p to 621.3p), Persimmon (-38p to 1739p), Taylor Wimpey (-3p to 154.3p), Prudential (-25.5p to 1371p) and Legal & General (-3.7p to 204.6p).

In afternoon trading the biggest risers on the FTSE 250 Index were Kaz Minerals (+16.8p to 196.8p), William Hill (+13.2p to 316.2p), esure Group (+8.6p to 265.3p), Metro Bank (+77p to 2412p) and PayPoint (+30p to 1009p).

The biggest fallers on the FTSE 250 Index were CMC Markets (-7.8p to 270.2p), International Personal Finance (-6.3p to 269.5p), Virgin Money (-5.8p to 279.7p), Pagegroup (-7.1p to 347.3p) and Tullett Prebon (-6.9p to 359.7p).