London close: Stocks finish higher as pound weakens

The FTSE 100 ended slightly higher as the pound weakened against the dollar on fresh Brexit jitters.

London’s top tier index rose 0.38% to 7,043.96 points.

The pound fell 0.35% against the dollar at $1.2351 following reports that EU Brexit negotiators were insisting the UK should agree to its exit from the bloc before Brussels could offer a transitional deal.

The news came after International Trade Secretary Liam Fox has indicated he is open to a transitional deal.

Meanwhile, oil prices were up, with West Texas Intermediate rising1.15%% to $53.68 a barrel and Brent crude 1.57% higher at $55.80.

At the same time, investors were digesting a series of events that took place late on Monday.

A truck ploughed into a Christmas market in Berlin, killing 12 people and injuring 48 in what is suspected to have been a terrorist attack.

In Turkey, the Russian ambassador was shot dead by an off-duty policeman who appeared to be protesting Russia’s involvement in Aleppo, while in Zurich, three people were injured in a gun attack at a mosque.

Market participants also mulled over policy announcements from the Bank of Japan and the Reserve Bank of Australia.

The BoJ kept its monetary policy unchanged on Tuesday, as expected, maintaining its target for a negative 0.1% interest on some excess reserves and the 0% 10-year government bond yield.

However, the BoJ sounded a more upbeat note on the economy, underpinning expectations that its next move will be a hike rather than a cut to interest rates.

“Global markets received a pleasant surprise on Tuesday following the Bank of Japan’s more upbeat view of its economy which reinforced expectations of a potential interest rate increase in the New Year,” said FXTM research analyst Lukman Otunuga.

“The yen’s persistent weakness could boost inflation in Japan by elevating import costs and such remains supportive for overall economic growth. Although the BoJ has ended the year on a positive note, the lurking fears of inflation which is still under the golden 2% target may be a cause for concern in 2017.”

Meanwhile, the Reserve Bank of Australia also stood pat on interest rates, as expected, at a historic low of 1.5%, and hinted that it was happy to keep rates where they are for the moment. The RBA stopped short of mentioning a recession but suggested the door was open to a rate cut in the New Year.

Closer to home, the CBI reported that the balance of retailers reporting a year-on-year increase in retail sales volumes climbed to a 15-month high of +35% in December from +26% in November, beating forecasts of +20%.

“A buoyant December CBI Distributive Trades survey - covering the last week of November (including Black Friday) and the first two weeks of December - points to consumers splashing out in the run-up to Christmas, thereby maintaining a strong fourth quarter performance and boosting hopes that GDP growth has held up well,” said Howard Archer, chief UK and European economist at IHS Global Insight.

Archer said consumers are still benefiting from relatively decent purchasing power and high employment.

However, with a weaker post-Brexit pound set to push inflation higher, purchasing power is likely to dwindle, Archer said.

In corporate news, Lloyds Banking Group was in the black after announcing the acquisition of credit card business MBNA from Bank of America for £1.9bn.

Pharmaceutical giant GlaxoSmithKline ticked higher after saying it achieved positive results from a phase three HIV study, which assessed the efficiency of a two-drug regimen.

Electra Private Equity edged up after saying it will receive around £106m from the sale of its stake in Innovia by investment manager Epiris LLP.

Digital payment systems provider Paysafe surged after announcing plans to begin an inaugural share buyback programme of up to £100m.

On the downside, Randgold Resources and Fresnillo were on the back foot as gold and silver prices fell.

Market Movers

FTSE 100 (UKX) 7,042.87 0.37%
FTSE 250 (MCX) 17,766.42 -0.09%
techMARK (TASX) 3,332.36 -0.25%

FTSE 100 - Risers

Carnival (CCL) 4,145.00p 3.03%
Barclays (BARC) 227.70p 2.54%
Lloyds Banking Group (LLOY) 63.94p 2.22%
Prudential (PRU) 1,592.50p 2.08%
Mediclinic International (MDC) 753.00p 1.96%
Ashtead Group (AHT) 1,560.00p 1.69%
Glencore (GLEN) 272.65p 1.58%
Rio Tinto (RIO) 3,097.00p 1.54%
Royal Bank of Scotland Group (RBS) 226.30p 1.43%
Legal & General Group (LGEN) 243.80p 1.33%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,819.00p -2.26%
Fresnillo (FRES) 1,090.00p -2.15%
Babcock International Group (BAB) 936.50p -1.27%
Randgold Resources Ltd. (RRS) 5,635.00p -1.23%
Croda International (CRDA) 3,169.00p -1.22%
Sky (SKY) 985.00p -1.01%
BT Group (BT.A) 368.15p -0.88%
Associated British Foods (ABF) 2,681.00p -0.85%
Micro Focus International (MCRO) 2,139.00p -0.70%
Shire Plc (SHP) 4,570.00p -0.70%

FTSE 250 - Risers

Paysafe Group (PAYS) 360.60p 5.41%
Safestore Holdings (SAFE) 344.90p 3.89%
HarbourVest Global Private Equity Limited A Shs (HVPE) 1,152.00p 3.78%
Essentra (ESNT) 459.00p 2.98%
Fisher (James) & Sons (FSJ) 1,603.00p 2.43%
Fidessa Group (FDSA) 2,302.00p 2.36%
Evraz (EVR) 218.00p 2.35%
Petrofac Ltd. (PFC) 874.00p 2.04%
Aberdeen Asset Management (ADN) 258.90p 1.93%
Ferrexpo (FXPO) 139.40p 1.83%

FTSE 250 - Fallers

Polypipe Group (PLP) 308.10p -4.17%
Hochschild Mining (HOC) 190.20p -3.74%
Nostrum Oil & Gas (NOG) 408.00p -3.45%
Halma (HLMA) 912.50p -3.39%
Renishaw (RSW) 2,492.00p -2.88%
Keller Group (KLR) 803.50p -2.67%
John Laing Group (JLG) 269.70p -2.64%
Clarkson (CKN) 2,005.00p -2.53%
CLS Holdings (CLI) 1,557.00p -2.44%
Marshalls (MSLH) 273.20p -2.25%