LONDON MARKETS: FTSE 100 Steps Higher, On Course For A Quarterly Rise

By Carla Mozee, MarketWatch Features Dow Jones Newswires

U.K. stocks gained ground Friday, with pound weakness priming the blue-chips market for a potential rise for the week and quarter.

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The benchmark FTSE 100 index picked up 0.7% to 7,374.90, as all sectors rose. The index on Thursday closed up 0.1% (http://www.marketwatch.com/story/banks-continue-to-rise-in-otherwise-downbeat-uk-stock-market-2017-09-28).

The London index was on course for a weekly rise of 0.9%, essentially on par with its likely percentage gain for the third quarter, which stock investors will wrap up on Friday.

The benchmark extended gains Friday as the pound fell below $1.34 after second-quarter gross domestic product on an annual basis was revised lower. The Office for National Statistics said its final reading of year-over-year growth came in at 1.5%, down from a previous estimate of 1.7%. Sterling traded at $1.3381 in the afternoon, down from $1.3441 late Thursday in New York.

A stronger pound can hurt shares of multinational companies on the FTSE 100, as earnings that the companies make overseas can be reduced when converted back to sterling.

Among multinationals whose shares were making their way higher Friday was luxury-goods seller Burberry Group PLC (BRBY.LN)(BRBY.LN) as it tacked on 1.6%, Unilever (ULVR.LN) (ULVR.LN) added 1.5% and medical devices maker Smith & Nephew PLC (SN.LN) bulked up 1.1%.

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The pound was on track for a 0.9% weekly slide against the dollar, trimming its monthly gain to around 3.6%. The September gain was largely due to signals from the Bank of England that it's eyeing a potential interest rate increase in coming months. Pound strength in turn has pulled the FTSE 100 toward a September loss of 0.7%, the first monthly loss since June.

Bank of England Gov. Mark Carney on Friday reiterated on BBC Radio that Britons can expect somewhat of an increase in rates if the economy continues on its current course.

"The continued explicit guidance from the BOE shows that is it on the cusp of hiking and wants to avoid a potentially disorderly adjustment in markets and in the real economy," said Kallum Pickering, senior U.K. economist at Berenberg, in a note.

"After the first hike in November 2017, we continue to expect a very gradual tightening thereafter to sustainably return inflation to its 2% target, with four hikes in total between now and the end of 2019."

(https://twitter.com/BBCr4today/status/913681563090595840)

Housing shares: The Nationwide Building Society said U.K. house prices edged up 0.2% in September (http://www.marketwatch.com/story/uk-house-prices-stable-but-drop-in-london-2017-09-29) after a decline in August, but house prices in London fell 0.6% on the year, the annual fall in eight years.

Shares of home builders were still able to move up Friday. Persimmon PLC (PSN.LN) put on 2.1%, Taylor Wimpey PLC (TW.LN) was 1.5% higher and Barratt Developments PLC (BDEV.LN) rose 0.9%.

In other developments Friday, shares of Aviva PLC (AV.LN) rose 1.2% after the insurer said it is selling its joint venture in Italy, Avipop Assicurazioni SpA, for 265 million euros ($311.8 million) (http://www.marketwatch.com/story/aviva-sells-italian-joint-venture-for-265-million-2017-09-29) to Banco BPM SpA (BAMI.MI).

Off the main benchmark, shares of Carillion PLC (CLLN.LN) plunged 17% after the construction services swung to a half-year loss of GBP1.15 billion ($1.54 billion) and cut its full-year sales outlook. It now expects total revenue of GBP4.6 billion to GBP4.8 billion, compared with a previous estimate of GBP4.8 billion to GBP5.0 billion.

(END) Dow Jones Newswires

September 29, 2017 10:57 ET (14:57 GMT)