London close: Stocks finish higher as pound weakens on Brexit news

London stocks finished higher on Monday as the pound weakened after Prime Minister Theresa May revealed the timing of Brexit negotiations.

May said the government will trigger Article 50 of the Lisbon Treaty by the end of March 2017, which sent the pound to a three-month low against the euro and the dollar. The timing means the UK will leave the EU by summer 2019.

May told the Tory Party conference the government would make a deal with the EU as an “independent, sovereign” UK.

“There is an anxious road ahead for the UK government as they prepare to take the turn towards exiting the European Union, which is why I personally believe the Pound will remain depressed for a prolonged period,” said FXTM vice president of market research Jameel Ahmad.

“I maintain my own view that the GBPUSD can realistically conclude the year between 1.20 and 1.25.”

Meanwhile, a weaker pound appeared to support the UK manufacturing industry in September. Markit’s purchasing managers’ index rose to 55.4 last month from 53.4 in August, beating expectations for a reading of 52.1. A reading above 50 signals expansion in sector activity, while a level below that indicates a contraction.

“While domestic orders were a significant driver of the result, the manufacturing sector appears to be benefiting from the fall in the pound that occurred both before and after the EU referendum,” said Scott Bowman, UK economist at Capital Economics.

In other UK news, the Bank of England will subject Barclays, HSBC,Lloyds, Nationwide, Royal Bank of Scotland, Santander and Standard Chartered to a two-part stress test in 2017.

The BoE, which is still analysing the results of the 2016 stress tests before scheduled feedback to the banks next month, suggested a year ago that next year's stress tests of the major UK banks will for the first time include a second scenario.

In the Eurozone, Markit’s final manufacturing PMI came in at 52.6 in September, in line with the 'flash' estimate and up from 51.7 the month before.

Across the Atlantic, Markit’s final US manufacturing PMI fell to a three-month low of 51.5 in September from 52.0 in August. Still, this was a touch above the flash estimate of 51.4.

Separately, the Institute for Supply Management said its manufacturing index rose to 51.5 in September from 49.4 in August, beating forecasts of 50.3.

The Commerce Department revealed US construction spending fell 0.7% month-on-month to $1.142trn. Economists had been expecting a rise of 0.3% in comparison to July.

In company news, Henderson Group surged after agreeing a $6bn merger with US fund management peer Janus Capital.

AstraZeneca advanced as it global biologics research and development arm MedImmune entered into a licensing agreement with Allergan for the global rights to MEDI2070, which is currently in a Phase IIb clinical trial for moderate-to-severe Crohn's disease and ready for Phase II for ulcerative colitis.

Market Movers

FTSE 100 (UKX) 6,984.38 1.23%
FTSE 250 (MCX) 18,178.81 1.72%
techMARK (TASX) 3,537.21 1.47%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 3,279.00p 3.11%
Travis Perkins (TPK) 1,592.00p 3.11%
Anglo American (AAL) 995.40p 2.87%
London Stock Exchange Group (LSE) 2,880.00p 2.86%
Schroders (SDR) 2,770.00p 2.74%
Provident Financial (PFG) 3,112.00p 2.60%
Rolls-Royce Holdings (RR.) 737.50p 2.43%
Hikma Pharmaceuticals (HIK) 2,067.00p 2.43%
Bunzl (BNZL) 2,334.00p 2.37%
Johnson Matthey (JMAT) 3,372.00p 2.37%

FTSE 100 - Fallers

ITV (ITV) 183.80p -1.82%
Marks & Spencer Group (MKS) 326.00p -1.54%
BT Group (BT.A) 385.10p -1.02%
Legal & General Group (LGEN) 216.60p -0.96%
Next (NXT) 4,743.00p -0.69%
British Land Company (BLND) 629.00p -0.55%
International Consolidated Airlines Group SA (CDI) (IAG) 396.90p -0.48%
Severn Trent (SVT) 2,495.00p -0.40%
Sainsbury (J) (SBRY) 245.00p -0.33%
United Utilities Group (UU.) 1,000.00p -0.30%

FTSE 250 - Risers

Henderson Group (HGG) 270.70p 16.68%
Evraz (EVR) 180.00p 11.80%
Ibstock (IBST) 173.00p 7.12%
Kaz Minerals (KAZ) 236.00p 6.84%
Jupiter Fund Management (JUP) 451.00p 6.02%
OneSavings Bank (OSB) 268.80p 5.95%
Aberdeen Asset Management (ADN) 342.60p 5.00%
Homeserve (HSV) 604.50p 4.95%
Countryside Properties (CSP) 254.40p 4.78%
Aldermore Group (ALD) 175.50p 4.71%

FTSE 250 - Fallers

Ocado Group (OCDO) 259.60p -1.85%
Barr (A.G.) (BAG) 509.00p -0.78%
Great Portland Estates (GPOR) 628.50p -0.71%
Softcat (SCT) 318.10p -0.59%
Brown (N.) Group (BWNG) 188.80p -0.58%
Aggreko (AGK) 949.00p -0.47%
Debenhams (DEB) 55.50p -0.45%
Derwent London (DLN) 2,590.00p -0.42%
B&M European Value Retail S.A. (DI) (BME) 254.00p -0.39%
John Laing Infrastructure Fund Ltd (JLIF) 128.30p -0.39%