November 2, 2018 / 11:13 AM / 7 months ago

Britain's FTSE hits 3-week high on optimism over Brexit, U.S.-China trade

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* FTSE 100 on track for best week in nearly 2 years

* Burberry, miners boosted by hopes of end to U.S.-China row

* JPM China fund up 10 percent

By Josephine Mason

LONDON, Nov 2 (Reuters) - UK shares bounced for a fourth session on Friday as mining and luxury goods stocks led a rally amid growing optimism about a Brexit deal and hopes Washington and Beijing may end a trade row threatening global growth.

The FTSE 100 was up 0.7 percent at 1053 GMT after hitting its highest since Oct. 10 in early deals, with financials and miners providing the biggest boost to the index.

Without a major tech exposure, the British market shrugged off Apple’s disappointing holiday sales forecast that dragged some European chipmakers lower.

The blue chip was set for its best weekly performance in nearly two years in a technical correction after the dramatic sell-off last month. October was the FTSE’s worst month in more than three years.

Most macro focus remained on hopes of a Brexit deal and signals from the Bank of England that if the exit from the European Union is smooth, more interest rate hikes could be on the way.

“I think we’re seeing a relief rebound. The sell-off was overdone. (But) I’m not convinced we’ve seen the lows,” said Michael Hewson, chief market analyst at CMC Markets UK.

The FTSE mining sector hit its highest since Sept. 25, marking a full recovery from October’s sell-off amid worries that the U.S.-China trade dispute will hurt demand from China, the world’s largest consumer of raw materials.

Copper prices jumped on Friday after a Bloomberg report that U.S. President Donald Trump wants to reach an agreement with his Chinese counterpart Xi Jinping at the G20 summit in Argentina later this month.

Evraz rose 4.8 percent, while copper miner Antofagasta gained 3.8 percent.

Hopes of a trade deal also buoyed Burberry and other European luxury goods companies which have been hurt by worries about weaker spending by China’s burgeoning middle class. Burberry topped the leader board with a 4.8 percent rise.

JPMorgan Chinese Investment Trust was the biggest gainer on the small caps with a 10-percent rally and on track for its best day in 20 years. In late October, the shares hit their lowest since May last year.

Boardroom news drew focus elsewhere on the FTSE 100. Sage Group rallied 3 percent as investors welcomed news the software company’s finance chief Steve Hare will take over as chief executive.

“It removes some of the uncertainty” following the resignation of predecessor Stephen Kelly in August, said Hewson.

On the midcap FTSE 250 which was up 1.03 percent, Energean Oil jumped 7.7 percent. Indivior rallied 5.7 percent after Jefferies raised its price target on the specialty pharma stock. (Reporting by Josephine Mason; editing by Andrew Roche)

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