December 18, 2017 / 9:35 AM / 6 months ago

Sterling holds back Britain's FTSE, spreadbetters plunge

LONDON (Reuters) - UK shares rose on Monday at a slightly lower pace than European peers as a global wave of optimism over a U.S. tax bill and the prospect of a coalition to rule Germany lifted stocks and led the MSCI all-country world index to new record highs.

A sign displays the crest and name of the London Stock Exchange in London, Britain August 15, 2017. REUTERS/Neil Hall

The FTSE 100 .FTSE was up 0.6 percent, restrained by a rising pound, while the pan-European STOXX 600 rose by twice as much, up 1.2 percent.

A strong currency typically cuts revenues for the international companies that dominate the FTSE 100 and do much of their business outside the UK.

The FTSE 250 .FTMC, made up of smaller constituents and more focused on the UK economy, was up 1.1 percent.

“We’ve been running out of company news to talk about for a while now and the big driver has been U.S. tax reform,” said Chris Beauchamp, a market analyst at IG.

Financials added the most points to the index - HSBC (HSBA.L) rose 0.6 percent, Prudential (PRU.L) 2.2 percent and Barclays (BARC.L) 1.1 percent.

However, shares in London-listed spreadbetters IG Group (IGG.L), Plus500 (PLUSP.L) and CMC Market (CMCX.L) plunged between 9.2 percent and 12.5 percent after the European Union’s securities watchdog said it may curb core parts of their market under sweeping new product powers from January.

Unilever (ULVR.L) was up 0.3 percent after initial losses after it agreed to sell its margarine and spreads business to U.S. private equity firm KKR (KKR.N) for 6.83 billion euros to concentrate on faster growing products.

“At last the market has the deal that it wanted, on the market’s desired terms,” Jefferies analysts commented, adding, “The positive takeaway for bulls like us is that Unilever is willing to continue to slay sacred cows, in pursuit of growth and value.”

LSE (LSE.L) gained 0.3 percent with reports that activist hedge fund The Children’s Investment Fund (TCI), which has a 5 percent stake in the London Stock Exchange, is unlikely to succeed in its attempt to remove chairman Donald Brydon at a shareholder vote on Tuesday.

Lonmin (LMI.L) was down about 3 percent as the CEO of the miner told Reuters that plans to cut around 13,000 jobs were likely to be the biggest obstacle for its suitor, Sibanye-Stillwater (SGLJ.J), to winning South African regulatory approval for its proposed takeover.

Retailers Next (NXT.L) fell 0.4 percent and Morrison Supermarkets (MRW.L) lost 1 percent.

Easyjet (EZJ.L), which confirmed the acquisition of Air Berlin assets, fell 2.8 percent while rival Ryanair (RYA.I) lost 3.2 percent. The latter’s decision to recognise trade unions has averted the threat of strikes but rattled investors.

Editing by Mark Heinrich

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