LONDON MARKETS: U.K. Stocks Swing Higher As Pound Falters After Lackluster Data

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

FTSE 100 on course for weekly rise

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U.K. stocks erased earlier losses and ended slightly higher on Friday after the pound gets chopped down following a trio of disappointing data.

The FTSE 100 index rose 0.2% to close at 7,350.92, after trading as low as 7,314.69 earlier in the day. The benchmark advanced 0.5% for the week, the first week of trade in the second half of 2017.

The FTSE had opened in negative territory as investors were spooked by growing signs that global central banks are inching closer to unwinding their ultraloose monetary policies that have supported stock markets in recent years.

However, the U.K. benchmark started to head north after industrial production, manufacturing and the trade balance all disappointed and sent the pound sharply lower. Sterling bought $1.2878, down from $1.2970 late Thursday in New York. A weaker currency tends to benefit the FTSE 100 as about 75% of revenues are generated overseas.

"Where to begin? Manufacturing and industrial production unexpectedly contracted by 0.2% and 0.1% respectively, the former hurt by a slump in car production, the latter missing forecasts for a 4th consecutive month," said Connor Campbell, financial analyst at Spreadex, in a note.

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"None of this helped dispel the idea that the UK economy is faltering, news that took a toll on an already limp sterling," he added.

The pound stayed lower after the highly anticipated U.S. jobs report showed 222,000 jobs were added to the economy in June (http://www.marketwatch.com/story/us-stock-futures-in-holding-pattern-ahead-of-top-tier-jobs-report-2017-07-07), better than the 180,000 expected by economists polled by MarketWatch. The unemployment rate rose to 4.4% from 4.3% as more people started looking for work.

"The above-consensus payroll figure provided further ammunition for this week's selloff in the bond market and will augment the Fed's decision to begin balance sheet reduction sooner than later," Charlie Ripley, investment strategist for Allianz Investment Management, said in a note.

"On balance, the labor market continues to be solid and despite the softer inflation data as of late, the solid employment data should keep the Fed on course for policy normalization," he added.

Stock movers: Shares of easyJet PLC (EZJ.LN) climbed 5.4% after Credit Suisse raised its rating on the budget airline to outperform from neutral.

Energy companies were among major biggest decliners, sliding alongside a 3% drop in oil . Shares of BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN)(RDSB.LN) each fell 0.4%.

On the FTSE 250 index , Tullow Oil PLC (TLW.LN) lost 2.9%.

Alson the FTSE 250, shares of Aveva Group PLC (AVV.LN) gained 2.2% after the engineering software company said it made a solid start to fiscal 2018 and that its full-year outlook remains in line with expectations.

(END) Dow Jones Newswires

July 07, 2017 12:16 ET (16:16 GMT)