July 2, 2019 / 7:22 AM / 3 months ago

FTSE 100 hits 10-month high as sterling slips

(Reuters) - Britain’s main share index scaled a more than ten-month high on Tuesday driven by gains in internationally exposed stocks that benefited from a weaker sterling.

FILE PHOTO: Traders look at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

The FTSE 100 .FTSE, whose components book a major chunk of their revenue from overseas, gained 0.8% and hit its highest level since August 2018.

The more domestically focused mid-cap index, the FTSE 250, .FTMC edged 0.1% higher but was subdued as the pound slipped after a survey showed Britain's construction industry suffered its worst month in more than 10 years in June.

“There is no sugar-coating these numbers, they are awful,” said CMC Markets analyst Michael Hewson, adding that the data called into question the Bank of England’s argument that an interest rate hike was more likely than a rate cut.

“If anything these numbers scream rate cut.”

BoE governor Mark Carney later said a global trade war and a ‘no-deal’ Brexit may warrant a near-term policy response, which markets interpreted as dovish signals.

Consumer goods company Reckitt Benckiser (RB.L) and spirits company Diageo (DGE.L) were among the biggest boosts to the blue-chip bourse.

Financial stocks .FTNMX8350 advanced for a sixth straight session to further support the main index.

Weighing on the mid-cap index was a 29% slide in the shares of Funding Circle (FCH.L) after the peer-to-peer lending platform halved its 2019 revenue growth forecast due to weak demand for loans.

While the UK markets eked out gains, the relief rally sparked by a breakthrough in the U.S.-China trade talks fizzled out in Asia as focus shifted from a truce to the likelihood of an actual deal being struck any time soon.

Such a sceptical view gained ground after President Donald Trump said on Monday that any trade deal with China would need to be “somewhat tilted” in favour of the United States.

Among other moving stocks, insurer Hiscox (HSX.L) rose 2.2% and peer Admiral (ADML.L) was up 1% after reinsurance broker Willis Re said property reinsurance rates rose by up to 25% in the latest renewal round in areas of Florida hit by hurricanes.

Croda (CRDA.L) slipped 4% to a near six month low after UBS downgraded the speciality chemicals maker’s stock and Citigroup cut its price target.

Jupiter Fund Management (JUP.L) skidded 8.5% after it said it was considering appointing Devon Equity as adviser for European Opportunities Trust, prompting Jefferies analysts to call the news ‘negative’ and flag a potential 2% cut to 2020 net management fees.

For a graphic on Funding Circle lags FTSE 250 since its debut, see - tmsnrt.rs/2FMwHg8

Reporting by Shashwat Awasthi in Bengaluru; Editing by Arun Koyyur

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