North Korea fears continue to recede, spurring investors to take on more risk
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London-listed stocks rose for a second straight session on Tuesday, as the pound tanked after data showed U.K. inflation unexpectedly stayed unchanged in July.
The FTSE 100 index climbed 0.2% to 7,369.16, adding to a 0.6% advance from Monday.
The index was already trading higher from the open as fears of a nuclear war between the U.S. and North Korea continued to recede. North Korean leader Kim Jong Un decided not to launch a threatened missile attack on U.S. territory Guam (http://www.marketwatch.com/story/north-korea-steps-back-from-plan-to-launch-missiles-at-guam-2017-08-14), according to state media. The isolated nation's leader, however, warned that he could change his mind "if the Yankees persist in their extremely dangerous reckless actions."
Inflation: The London benchmark then moved a leg higher in mid-morning after the Office for National Statistics said U.K. inflation remained unchanged at 2.6% in July. Analysts had expected a 2.7% reading.
The miss sent the pound sharply lower to trade at $1.2873, compared with as high as $1.2971 earlier in the day and $1.2964 late Monday in New York. A weaker sterling tends to boost the U.K. blue-chip index as its components make most of their money overseas.
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"The data reduces the need for the Bank of England to tighten monetary policy in response to above target inflation, which peaked a couple of months ago just below 3%," said Craig Erlam, senior market analyst at Oanda, in a note.
"With price pressures appearing to have cooled and the economy still facing a couple of years of uncertainty and slower growth, markets appear to once again be pricing out a rate hike this year and possibly next," he added.
Stock movers: Shares of Next PLC (NXT.LN) fell 4.4% after Berenberg cut its rating on the high-street retailer to sell from hold.
Shares of Hargreaves Lansdown PLC (HL.LN) rose 0.2% after the financial services company reported a 20% jump in full-year profit (http://www.marketwatch.com/story/hargreaves-lansdown-full-year-profit-jumps-20-2017-08-15).
Shire PLC (SHPG) (SHPG) gained 1.8% after the drugmaker said it has applied for approval to sell its new dry-eye drug Lifitegrast in Europe.
(END) Dow Jones Newswires
August 15, 2017 07:18 ET (11:18 GMT)