LONDON MARKETS: FTSE 100 Marches Higher As U.K. Labor Data Pare Pound's Rise

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Home builders cheered by upbeat update from Bellway

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British blue-chips extended gains Wednesday, finding some relief as the pound came off session highs after data showed Britons' pay is being squeezed by higher consumer prices.

The FTSE 100 was up 0.5% at 7,539.86, building on modest gains after opening in the red. All sectors were printing gains in afternoon trade.

The benchmark strengthened while the pound pared gains following the U.K.'s employment report. 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).

The pound hit an intraday low of $1.2723 after the jobs report Wednesday, pulling away from an intraday high of $1.2796.

A weaker pound can lead the FTSE 100 higher as about 75% of the revenue generated by the index's companies comes from abroad. Such multinational companies include oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) .

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Shell shares turned higher, trading up 0.5% even as oil prices dropped roughly 1%. Oil prices were under pressure (http://www.marketwatch.com/story/oil-prices-under-pressure-on-worries-data-will-confirm-rising-us-stockpiles-2017-06-14) after the American Petroleum Institute late Tuesday reported an increase in weekly crude inventories. The U.S. government will release its supply report later Wednesday.

BP shares, however, were steady. Shell and BP shares make up a roughly 14% of the FTSE's weighting.

Wage woes: Pound investors early Wednesday "were still feeling bullish after the stronger U.K. inflation figures had raised the prospects that the Bank of England may turn hawkish," wrote Fawad Razaqzada, market analyst at Forex.com.

But the pay figures dampened that view, he said.

"[R]eal wages are falling sharply now ... Surely the BOE 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," he added.

The Bank of England is slated to keep interest rates on hold when it releases its decision at 12 p.m. London time Thursday. Before that, the Federal Reserve is expected to say it's raised interest rates when it releases its latest policy decision at 7 p.m. London time Wednesday.

Check out: Yellen may be 'forceful' in press conference when defending Fed's interest rate path (http://www.marketwatch.com/story/yellen-may-be-forceful-in-press-conference-when-defending-feds-interest-rate-path-2017-06-13)

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)

Home builders: In other developments Wednesday, 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 5% on the mid-cap FTSE 250 index .

On the FTSE 100, Barratt Developments PLC (BDEV.LN) climbed 2.6%, Taylor Wimpey PLC (TW.LN) gained 2.2% and Persimmon PLC (PSN.LN) picked up 1.7%.

"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."

The more domestically focused FTSE 250 was up 0.8% at 20,011 on Wednesday.

(END) Dow Jones Newswires

June 14, 2017 08:34 ET (12:34 GMT)