Pound back below $1.30
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U.K. stocks ended higher on Wednesday, outperforming the broader European markets as investors shook off disappointing corporate news and a credit downgrade for China.
Erasing opening losses, the U.K. FTSE 100 ended 0.4% higher at 7,514.90, logging its highest close since May 16.
"A lackluster British pound which has struggled to build on its election gains in the last week softened the blow of a series of poorly-received corporate updates from the likes of Marks & spencer and B&Q-owner Kingfisher," said Jasper Lawler, senior market analyst at London Capital Group, in a note.
The pound traded at $1.2932, down from $1.2961 late Tuesday in New York, ahead of the release of minutes from the Federal Reserve's most recent meeting after European trading closes Wednesday.
Read:Fed minutes may quell doubt about a June interest-rate hike (http://www.marketwatch.com/story/fed-minutes-may-quell-fresh-doubts-about-a-june-rate-hike-2017-05-19)
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"Early alarm at China's debt downgrade by Moody's eased by the afternoon with China-sensitive mining stocks well off lows of the day," he added.
Ahead of the Europe open, Moody's had downgraded China's credit rating for the first time in nearly 30 years (http://www.marketwatch.com/story/moodys-downgrades-china-rating-for-the-first-time-in-nearly-30-years-2017-05-24), to A1 from Aa3. Moody's said it's concerned about the impact that rising levels of debt will have on the world's second-largest economy, which is a major buyer of industrial and precious metals.
Miners initially traded firmly lower, but ended mixed. Rio Tinto PLC (RIO) (RIO) (RIO) lost 0.5%, while BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) rose 0.9%. Copper miner Antofagasta PLC (ANTO.LN) climbed 0.4% and Anglo American PLC (AAL.LN) added 0.8%
A "ratings downgrade has been long overdue," for China, wrote RBC Capital Markets, noting that the yuan dropped sharply against the dollar after news of the downgrade. "However, the fact that the rating wasn't cut by more given the deterioration in China's debt metrics in the past decade saw [China's offshore currency] quickly recoup losses."
Meanwhile, Glencore PLC (GLEN.LN) pared it loss to 0.1%. The miner said it "made an informal approach to Bunge (http://www.marketwatch.com/story/glencore-makes-takeover-approach-to-bunge-2017-05-24)...regarding a possible consensual business combination." A deal with grain maker Bunge Ltd. (BG) could make Glencore a major force in the U.S. agriculture market.
Retailers: Shares of department-store operator Marks & Spencer PLC (MKS.LN) (MKS.LN) flipped higher, rising 1.5%. They had been lower at the start of the session after the company said full-year profit fell to 117.1 million pounds ($152.2 million) from GBP406.9 million a year ago on weaker sales for clothing and non-food items.
The company's "[d]ividend was flat but net debt was better at GBP1.9 billion," said UBS in a note.
Shares of apparel and furnishings seller Next PLC (NXT.LN) ended down 0.8%.
Kingfisher PLC shares (KGF.LN) slumped 7% after the parent of home improvement stores B&Q and Castorama said first-quarter comparable sales fell 0.6% (http://www.marketwatch.com/story/kingfisher-quarterly-same-store-sales-decline-2017-05-24) on weak sales in France and disruption caused by a company overhaul.
(END) Dow Jones Newswires
May 24, 2017 12:11 ET (16:11 GMT)