London close: Another spike in Sterling weighs on the Footsie

London stocks closed in the red on Friday, taking a turn for the worse as the pound shot to its highest level since the Brexit vote after hawkish comments from Bank of England policymaker Gertjan Vlieghe reinforced expectations for a rate hike.

The FTSE 100 was down 1.10% to 7,215.47, extending earlier losses, as the pound rose 1.04% versus the euro to 1.1359 and 1.4% against the dollar to 1.3585, hitting its highest level since June last year after Vlieghe said interest rates could rise "as early as in the coming months."

A stronger pound tends to dent the top-flight index as around 70% of its constituents derive their earnings from overseas.

European bourses went much the same way, with the DAX down 0.17% to 12,518.81, the CAC 40 0.22% lower to 5,213.91 and the IBEX 35 0.42% in the red to 10,317.40.

Speaking in London as part of the Society of Business Economists' annual conference, Vlieghe said: "There remains a risk that, at some stage, the uncertainty surrounding the Brexit process has a larger impact on the economy than we have seen so far. If that happens, monetary policy would respond appropriately.

"But for now, it seems the net effect of the many underlying forces acting on the UK economy is that slack is continually being eroded and wage pressure is gently building.

"If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in Bank Rate might be as early as in the coming months."

By way of a reaction, Neil Wilson, senior market analyst at ETX Capital, said: "The market has taken his comments to mean a quarter point hike is on its way, probably by the end of the year, building on the hawkish tone from the BoE yesterday.

"Quite a metamorphosis and one that highlights how the internal MPC pressures are building rapidly towards a hike in interest rates. This does not mean the start of a tightening cycle as we understand them necessarily, but at least a 'correction' to the Bank's cut last August."

Away from financial markets, the backdrop in London on Friday was unsettling as 18 people were taken to hospital after being injured in an explosion on a London Underground train in West London that was being treated as a terror attack.

Earlier, stocks kicked off the session with only minor losses as investors reacted calmly to news that North Korea had launched another missile over Japan. The missile was said to have traveled 3,700km before landing in the sea off Hokkaido, flying further and higher than the one fire over Japan last month. The launch came just days after the UN Security Council approved fresh sanctions against Pyongyang for its nuclear test on 3 September.

On the corporate front, shares in Coca‑Cola HBC fell as it said that chief executive officer Dimitris Lois will be taking a temporary leave of absence from the company in order to undergo treatment for a medical condition.

GlaxoSmithKline retreated despite saying it had received a "positive opinion" for its Trelegy Ellipta treatment for chronic obstructive pulmonary disease from the European Medical Authority's Committee for Medicinal Products for Human Use.

Indivior was up 1.56% after saying it has launched patent infringement lawsuits against Dr Reddy's, Actavis, Par, Alvogen, Teva, and Mylan over generic versions of its opioid addiction treatment, Suboxone.

JD Wetherspoon bucked the trend, however, surging after it served up a potent 43% shot of earnings growth and a passionate diatribe about Brexit from founder and chairman Tim Martin, while JD Sports Fashion pushed higher after announcing a joint venture agreement with South Korean footwear retailer, Shoemarker Inc.

Petrofac closed 1.18% lower despite RBC Capital Markets upping its stance on the oilfield services provider to 'sector perform' from 'underperform', but Carnival slumped as it was hit by a downgrade to 'neutral' from Credit Suisse, which removed the stock from its 'focus list'.

Market Movers

FTSE 100 (UKX) 7,215.47 -1.10%
FTSE 250 (MCX) 19,378.16 -0.75%
techMARK (TASX) 3,402.36 -1.08%

FTSE 100 - Risers

Imperial Brands (IMB) 3,327.50p 2.05%
ITV (ITV) 158.20p 1.41%
British American Tobacco (BATS) 4,741.00p 1.03%
Next (NXT) 5,045.00p 1.02%
Royal Mail (RMG) 376.80p 0.94%
Severn Trent (SVT) 2,230.00p 0.72%
BT Group (BT.A) 284.40p 0.67%
easyJet (EZJ) 1,213.00p 0.66%
Babcock International Group (BAB) 800.50p 0.63%
Johnson Matthey (JMAT) 2,835.00p 0.53%

FTSE 100 - Fallers

Carnival (CCL) 4,783.00p -6.22%
Provident Financial (PFG) 794.00p -4.28%
Pearson (PSON) 565.50p -3.58%
Ferguson (FERG) 4,486.00p -3.28%
Fresnillo (FRES) 1,441.00p -2.50%
Reckitt Benckiser Group (RB.) 6,775.00p -2.34%
BHP Billiton (BLT) 1,330.50p -2.28%
Antofagasta (ANTO) 931.50p -2.26%
Convatec Group (CTEC) 257.80p -2.20%
Standard Chartered (STAN) 734.80p -2.13%

FTSE 250 - Risers

Wetherspoon (J.D.) (JDW) 1,189.00p 13.89%
Petra Diamonds Ltd.(DI) (PDL) 84.00p 3.58%
Spire Healthcare Group (SPI) 260.20p 3.17%
JD Sports Fashion (JD.) 383.20p 2.98%
Millennium & Copthorne Hotels (MLC) 453.90p 2.34%
Syncona Limited NPV (SYNC) 168.00p 1.82%
Polypipe Group (PLP) 397.90p 1.74%
Galliford Try (GFRD) 1,364.00p 1.72%
The Renewables Infrastructure Group Limited (TRIG) 110.30p 1.66%
Saga (SAGA) 199.70p 1.63%

FTSE 250 - Fallers

Aggreko (AGK) 862.50p -4.17%
Cairn Energy (CNE) 176.90p -3.81%
BTG (BTG) 663.50p -3.77%
Spirax-Sarco Engineering (SPX) 5,540.00p -3.48%
Nex Group (NXG) 638.00p -3.48%
Greencore Group (GNC) 186.50p -3.47%
NewRiver REIT (NRR) 346.50p -3.40%
Weir Group (WEIR) 1,741.00p -3.01%
Investec (INVP) 552.00p -2.99%
Entertainment One Limited (ETO) 252.80p -2.96%