LONDON MARKETS: FTSE 100 Finishes In The Red, Pressured By Pound's Rebound

By Carla Mozee and Victor Reklaitis, MarketWatch Features Dow Jones Newswires

But home builders cheered by upbeat update from Bellway

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British blue-chips closed with losses Wednesday, erasing earlier gains as the pound advanced against the dollar following weak U.S. economic data.

The FTSE 100 fell by 0.4% to end at 7,474.40, as sterling turned higher, climbing back above the $1.28 handle.

The British stock gauge "started out strong, but it has given up all its gains as the rally in the pound hit the main equity benchmark," said David Madden, market analyst at CMC Markets UK, in a note.

A stronger pound can help take the FTSE 100 lower, as about 75% of the revenue generated by the index's multinational companies comes from abroad.

Disappointing readings on U.S. inflation and retail sales for May on Wednesday whacked the dollar , sending it slumping against sterling and other rivals. The moves came before the Federal Reserve releases its policy decision at 7 p.m. London time.

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"Dealers were quick to dump the U.S. dollar in the wake of inflation and retail sales numbers that missed investors' expectations," Madden said.

Investors expect the Fed to raise interest rates, and Chairwoman Janet Yellen is expected to push back on the market's skepticism (http://www.marketwatch.com/story/heres-what-the-market-thinks-the-fed-has-got-wrong-2017-06-13) about the need for another rate increase this year. The Fed's latest policy decision is due at 7 p.m. London time Wednesday.

Crude crumbles: Oil giants were among the notable losers as crude prices dropped. Oil futures tumbled nearly 4% after the U.S. Energy Information Administration said weekly crude supplies fell by 1.7 million barrels, less than anticipated (http://www.marketwatch.com/story/oil-prices-extend-losses-as-eia-reports-smaller-than-expected-fall-in-us-crude-supplies-2017-06-14).

BP PLC (BP.LN) (BP.LN) fell 1.8%, and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) closed 1.7% lower.

Home builders gain: Home builder Bellway PLC (BWY.LN) said it foresees 10% growth in home sales (http://www.marketwatch.com/story/bellway-to-top-views-with-10-rise-in-home-sales-2017-06-14) in fiscal 2017, ahead of expectations. Bellway shares rose 6% on the midcap FTSE 250 index , which itself finished 0.6% higher at 19,974.70.

On the FTSE 100, Barratt Developments PLC (BDEV.LN) climbed 3.2%, Taylor Wimpey PLC (TW.LN) gained 1.5% and Persimmon PLC (PSN.LN) picked up 1.3%.

"There is something of an arm-wrestle going on within the U.K.'s housing market at the moment. Recent figures from both Nationwide and Halifax show prices falling, while political uncertainty has added to the concerns," said George Salmon, equity analyst at Hargreaves Lansdown.

"However, the housebuilders have released a relentless string of positive updates, and these numbers from Bellway are very encouraging, too."

Wage woes: Earlier Wednesday, data showed Britons' pay is being squeezed by higher consumer prices. The unemployment rate in the three months to April remained at 4.6%, the lowest since mid-1975. But average wages adjusted for inflation fell on the year by 0.6% (http://www.marketwatch.com/story/uk-wages-fall-as-unemployment-holds-steady-2017-06-14).

Real wages are "falling sharply," wrote Fawad Razaqzada, market analyst at Forex.com. The Bank of England "won't ignore this and as such we are expecting it to maintain its dovish stance on Thursday and possibly in subsequent meetings, too, when you also take into account raised political uncertainty."

The Bank of England is slated to keep interest rates on hold when it releases its decision at 12 p.m. London time Thursday.

Huge fire delays deal announcement: U.K. Prime Minister Theresa May and her Conservative Party have been in talks with Northern Ireland's Democratic Unionist Party about working together in the House of Commons after the Conservatives lost their majority in parliament in last week's general election.

But reports said Wednesday an announcement of a deal would be delayed because of a massive fire at a London apartment building that has killed at least six people.

See:Massive fire engulfs 24-story apartment tower in west London (http://www.marketwatch.com/story/massive-fire-engulfs-27-story-apartment-tower-in-london-2017-06-13)

May has said she's ready for talks about Britain's exit from the European Union to begin next week.

Read:'Door remains open' to U.K. staying in the EU, says France's Macron (http://www.marketwatch.com/story/door-remains-open-to-uk-staying-in-the-eu-frances-macron-tells-theresa-may-2017-06-14)

(END) Dow Jones Newswires

June 14, 2017 12:44 ET (16:44 GMT)