LONDON MARKETS: Banks Continue To Rise In Otherwise Downbeat U.K. Stock Market

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

TUI shares slide after trading update

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Bank stocks on Thursday stood out in an otherwise listless U.K. stock market, advancing on expectations that interest rates soon will rise in both Britain and the U.S.

Shares of Barclays PLC (BCS) (BCS) posted the biggest gain in London, rising 1.7%. Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) added 0.7%, HSBC Holdings PLC (HSBA.LN) (HSBA.LN) (HSBA.LN) climbed 0.6% and Standard Chartered PLC (STAN.LN) gained 0.7%.

The positive moves for the sector came after the Bank of England's Chief Economist Andy Haldane late Wednesday in a Sky News interview (http://news.sky.com/story/interest-rate-rise-should-not-be-feared-says-bank-of-england-economist-11056411) said Brits should not fear higher interest rates, sparking speculation that the first rate hike in a decade is imminent.

The economist also reiterated the message from the BOE's September meeting that "we could be nearing the point where a reduction in some degree of monetary stimulus might be warranted in the coming months."

Higher rates tend to boost the banking sector as it means they can charge more for their loans. Across the pond, expectations for a rate hike later this year are also high after Federal Reserve Chairwoman Janet Yellen earlier this week said it would be "imprudent" to leave monetary policy on hold for too long. That helped push U.K. bank stocks higher on Wednesday.

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After London trading closed Wednesday, Boston Fed President Eric Rosengren said he backs 'regular and gradual' interest-rate rises (http://www.marketwatch.com/story/feds-rosengren-backs-regular-and-gradual-interest-rate-hikes-2017-09-27). Meanwhile, U.S. President Donald Trump's tax cuts proposal (http://blogs.marketwatch.com/capitolreport/2017/09/27/republicans-roll-out-tax-cut-plans-for-individuals-and-companies-live-blog/) presented on Wednesday was also seen as reinforcing expectations for a rate rise in December.

The rest of the U.K. market, however, was more muted on Thursday. The benchmark FTSE 100 index fell 0.1% to 7,303.13, pulling back from a 0.4% gain on Wednesday.

Shares of Imperial Brands PLC (IMBBY) (IMBBY) dropped 2.1% after the tobacco company said it's on track to meet its full-year targets (http://www.marketwatch.com/story/imperial-brands-says-set-to-meet-fy-expectations-2017-09-28) and that it's working on a rescue deal for struggling wholesaler Palmer & Harvey Holdings PLC.

TUI AG lost 1.3% after the travel operator said recent hurricanes had affected its Caribbean operations (http://www.marketwatch.com/story/tui-backs-guidance-despite-impact-of-hurricanes-2017-09-28). The company, however, still backed its 2017 fiscal guidance and said the summer 2017 season is closing out almost fully sold at 97%.

On the FTSE 250 index , shares of Stagecoach Group PLC (SGC.LN) advanced 1.5% after the transportation group reaffirmed its per-share profit guidance (http://www.marketwatch.com/story/stagecoach-group-sees-earnings-meeting-forecasts-2017-09-28).

(END) Dow Jones Newswires

September 28, 2017 04:12 ET (08:12 GMT)