London close: Blue chips higher after sterling flops on hung parliament

Blue-chip stocks campaigned to a higher close on Friday after PM Theresa May's Tories ended up with a humiliating hung parliament in their snap general election, causing sterling to flop on the dollar and euro.

The Tories lost their governing majority in parliament in what was alleged to be a vote to strengthen their Brexit negotiating bulwark. They have ended up jumping into bed with Northern Ireland's Democratic Unionist Party.

It remained unclear whether the two parties would form a coalition or operate a "confidence and supply" arrangement that would see Unionists support a minority government on vital matters in return for some of their policies being enacted.

UK bookies were already picking there could be another election this year.

At the close of trade the FTSE 100 was up 1.04% to 7,527.33, while the FTSE 250 edged higher by 0.13% to close at 19,769.96. Both Wall St and Europe were overall firmer. Sterling was down more than 1% on the dollar and euro.

"In many ways a hung parliament is the least market-friendly result because it creates uncertainty," said Jasper Lawler, senior market analyst at London Capital Group.

He expected that this could be the biggest delay to the start of Brexit negotiations, which were due to start on 19 June. Without a government, talks could not begin.

"In terms of importance this week, the ECB and 'The Donald' probably rank higher than the UK election result."

David Madden, market analyst at CMC Markets UK, noted that sterling's weakness made the FTSE 100 attractive given that about 70% of its constituents deriving their earnings from overseas.

"Some traders are wondering will we see a repeat of the post-EU referendum rally."

On the horizon were next week's Bank of England (BoE) interest-rate decision, which would be closely watched.

"Since the BoE have loosened their monetary policy so much in the past year, it is hard to image a rerun of that, but we could see Kristin Forbes change her mind about hiking rates."

With politics firmly in focus, UK industrial and manufacturing production figures came and went with little fuss.

In terms of sectors, multi-commodity miners such as BHP Billiton, Rio Tinto and Glencore did well as copper prices accelerated, while BP and Shell advanced with crude oil prices.

Insurance companies were notable among blue-chip stocks rising, as were a number of high-street banks and other financials.

Housebuilders suffered the heaviest losses, with Barratt Developments, Persimmon and Taylor Wimpey in the red as analysts argued increased political uncertainty would slow house purchases and make the sector less appealing.

Sky was under the cosh amid jitters over 21st Century Fox's $14bn bid to buy out the 61% of the broadcaster it doesn't already own.

Market Movers

FTSE 100 (UKX) 7,527.33 1.04%
FTSE 250 (MCX) 19,769.96 0.13%
techMARK (TASX) 3,598.81 0.54%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,274.00p 5.03%
Fresnillo (FRES) 1,725.00p 3.60%
Antofagasta (ANTO) 825.00p 3.51%
Standard Chartered (STAN) 780.20p 2.79%
CRH (CRH) 2,876.00p 2.64%
WPP (WPP) 1,673.00p 2.58%
BP (BP.) 467.80p 2.51%
St James's Place (STJ) 1,185.00p 2.51%
Scottish Mortgage Inv Trust (SMT) 418.00p 2.45%
BAE Systems (BA.) 675.00p 2.42%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 177.50p -3.27%
Babcock International Group (BAB) 882.50p -2.92%
Royal Bank of Scotland Group (RBS) 250.90p -2.45%
Barratt Developments (BDEV) 576.50p -2.29%
BT Group (BT.A) 294.75p -2.14%
Marks & Spencer Group (MKS) 360.10p -1.80%
Next (NXT) 4,276.00p -1.75%
Whitbread (WTB) 3,983.00p -1.70%
International Consolidated Airlines Group SA (CDI) (IAG) 585.00p -1.43%
Persimmon (PSN) 2,379.00p -1.33%

FTSE 250 - Risers

Kaz Minerals (KAZ) 532.50p 6.56%
Ferrexpo (FXPO) 195.10p 5.46%
Evraz (EVR) 203.80p 3.72%
Vedanta Resources (VED) 603.00p 3.61%
Ashmore Group (ASHM) 359.70p 3.01%
Vesuvius (VSVS) 570.00p 2.89%
IMI (IMI) 1,250.00p 2.80%
Centamin (DI) (CEY) 176.90p 2.67%
JPMorgan American Inv Trust (JAM) 391.00p 2.33%
Ted Baker (TED) 2,414.00p 2.29%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 579.00p -5.16%
Virgin Money Holdings (UK) (VM.) 279.70p -4.31%
ZPG Plc (ZPG) 349.90p -4.29%
Berkeley Group Holdings (The) (BKG) 3,093.00p -3.55%
Wetherspoon (J.D.) (JDW) 969.00p -3.10%
AA (AA.) 223.70p -3.08%
Travis Perkins (TPK) 1,557.00p -2.99%
Euromoney Institutional Investor (ERM) 1,140.00p -2.98%
OneSavings Bank (OSB) 408.00p -2.88%
Sanne Group (SNN) 645.00p -2.79%