LONDON MARKETS: U.K. Stocks Fall From 2-month High As Pound Regains Strength

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

Gold miners climb as North Korea tensions return to the fore

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U.K. stocks slipped back on Monday, losing grip on a two-month high as the pound recovered slightly and miners dropped.

The FTSE 100 index edged down 0.1% to 7,519.35, after closing at the highest level since Aug. 8 on Friday. The London benchmark ended last week with a 2% gain -- its biggest since December last year -- after renewed turmoil in the governing Conservative Party sent the pound sharply lower.

But on Monday, sterling regained some luster, trading at $1.3115, compared with $1.3069 late Friday in New York. The gain came after reports Prime Minister Theresa May could reshuffle her cabinet and leave out Foreign Secretary Boris Johnson, who's been critical of May's Brexit plans.

"May's disastrous speech (http://www.marketwatch.com/story/uk-leader-theresa-mays-slogan-literally-fell-apart-during-her-disastrous-speech-2017-10-04) at the Tory party conference last week has successfully caricaturized the dull atmosphere at the heart of the Conservatives and the way the Brexit negotiations have been handled so far," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

"Talks on cabinet reshuffle may have been a light hope for pound traders on Monday morning," she said in a note.

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Calls for the prime minister to step down (http://www.marketwatch.com/story/will-she-stay-or-will-she-go-bookie-sees-33-risk-theresa-may-will-resign-in-october-2017-10-06) increased last week after the Conservative's annual conference, sparking fears of another snap, or early, election that could derail the Brexit negotiations. Infighting at the top of May's party is already said to have slowed the exit talks with Brussels, as party members disagree on issues that are essential to move the negotiations forward.

North Korea tensions: Further away, tensions between the U.S. and North Korea also hit trading in London. Gold prices rose 0.6% to $1,282.30 (http://www.marketwatch.com/story/gold-prices-rise-as-north-korea-us-tensions-turn-the-screw-2017-10-09) an ounce on Monday after President Donald Trump in a string of tweets (http://www.marketwatch.com/story/trump-tweet-signals-new-depth-of-resignation-over-north-korea-2017-10-07) over the weekend brought back fears of a nuclear standoff between the nations.

That boosted the U.K.-listed gold miners, with shares of Fresnillo PLC (FRES.LN) up 0.9% and Randgold Resources Ltd. (RRS.LN) (RRS.LN) 0.7% higher. Outside the main index, Hochschild Mining PLC (HOC.LN) rallied 4.3%, and Acacia Mining PLC (ACA.LN) picked up 3.6%.

Other miners, however, traded lower, partly held back by disappointing service sector activity data from China (http://www.marketwatch.com/story/china-service-sector-growth-falls-to-21-month-low-2017-10-08). The country is a major user of natural resources, so any indications that growth is slowing tend to hit the mining sector.

Shares of Anglo American PLC (AAL.LN) lost 1%, Rio Tinto PLC (RIO) (RIO) (RIO) fell 0.8%, and Glencore PLC (GLEN.LN) gave up 0.7%.

Other stock movers: Shares of Smith & Nephew PLC (SN.LN) (SN.LN) dropped 1.3% after the medical technology company said Chief Executive Olivier Bohuon will retire (http://www.marketwatch.com/story/smith-nephew-ceo-bohuon-to-retire-by-end-of-2018-2017-10-09) by the end of 2018.

On the FTSE 250 index , shares of Millennium & Copthorne Hotels PLC (MLC.LN) soared 21% after Singapore's City Developments said it has offered to buy the remaining share of the U.K. hotel chain it doesn't already own.

(END) Dow Jones Newswires

October 09, 2017 04:49 ET (08:49 GMT)