November 11, 2019 / 8:40 AM / 25 days ago

Rising HK tensions, trade angst knock FTSE; domestic shares rally

(Reuters) - A mix of rising tensions in Hong Kong, dampened U.S.-China trade sentiment and a firmer pound hit the exporter-heavy FTSE 100 on Monday, while domestic stocks rallied after the Brexit Party lent some clarity ahead of the Dec. 12 election.

FILE PHOTO: Traders work at their desks whilst screens show market data at CMC Markets in London, Britain, December 13, 2018. REUTERS/Henry Nicholls

The FTSE 100 .FTSE slid 0.4% as a violent escalation of protests in Hong Kong knocked nearly 2% off Asia-exposed banks HSBC (HSBA.L) and StanChart (STAN.L) and drove mining stocks .FTNMX1770 lower.

The main bourse handed back nearly all the gains it accumulated last week, as the latest Chinese data disappointed and U.S. President Donald Trump cast doubt on the progress of trade negotiations with Beijing.

The FTSE 250 .FTMC, dominated by more domestically focused firms, added 0.3%. Baker Greggs (GRG.L) soared 16.5% after it forecast annual earnings ahead of expectations, its best day since floating more than three decades ago.

While expectedly downbeat domestic growth figures did little to move the needle, sterling jumped after Brexit Party leader Nigel Farage said he would not contest Conservative-held seats in the election.

“Price action suggests that the possibility of fewer obstacles in the way of an outright Conservative Party majority would be welcomed by sterling buyers,” Cityindex analyst Ken Odeluga said.

“Given the fact that a bigger Parliamentary Tory party could pass Boris Johnson’s Brexit deal more easily, uncertainty that has hamstrung Britain’s economy would be curtailed.”

JPMorgan’s basket of London-listed companies .JPDEUKDM that make their cash at home surged 1.3% and enjoyed its best day in nearly a month.

Brexit-sensitive stocks such as housebuilders also cheered the news, with blue-chips Taylor Wimpey (TW.L), Persimmon (PSN.L), Barratt (BDEV.L) and Berkeley (BKGH.L) up 2%-3.6%.

Political developments helped alleviate some gloom cast by a Moody’s report in which the rating agency had warned it may cut Britain’s sovereign debt rating again.

Small-cap Sirius Minerals (SXX.L) ended 8.4% higher, having surged nearly 40% earlier, as the fertiliser maker produced a revised development plan for its North Yorkshire polyhalite project.

AIM-listed ECO Animal Health (EAH.L) shed 24% and hit its lowest level in almost five years after the veterinary medicines maker blamed an outbreak of African swine fever and the trade war for a hit to its performance.

Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Saumyadeb Chakrabarty and Mark Heinrich

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