LONDON MARKETS: FTSE 100 Rises As Eyes Turn To Wages Data

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Pound continues to pull back

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A continued pullback in the pound helped push U.K. stocks modestly higher Wednesday, as investors waited for an update on jobs and wage growth that should help shape the Bank of England's thinking on an interest-rate hike.

The FTSE 100 index rose 0.2% to 7,533.44, with all sectors moving higher. The London benchmark on Tuesday shed 0.1% (http://www.marketwatch.com/story/ftse-100-tilts-lower-as-traders-brace-for-inflation-report-2017-10-17).

Labor report: Data on the U.K. jobs market in August will be a focus, given a persistent lack of growth in real wages that has been a concern for BOE policy makers, among others.

Analysts polled by FactSet expect the unemployment rate to remain at 4.3%. Average weekly earnings are forecast to rise by 2%, excluding bonuses, and by 2.1%, including bonuses.

Those figures for August would likely represent a fall in real wages, given data released Tuesday showed consumer price inflation climbed to 3% in September. That level of inflation is a full percentage point above the BOE's target, and the figures will add to policy makers' deliberations on whether to raise the bank's key interest rate from 0.25% at their Nov. 2 meeting.

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The jobs market report is due at 9:30 a.m. London time, or 4:30 a.m. Eastern Time, from the Office for National Statistics.

What strategists are saying: "Once again though, the unemployment data is expected to paint one picture with the rate remaining at 4.3%, while average earnings paints an entirely different one, as wages rise by only 2.1%. Negative earnings growth is one of the factors that is likely to weigh on the economy going forward and makes the BoE's decision on interest rates all the more difficult." -- Craig Erlam, senior market analyst, Oanda.

"The Bank of England has proven reticent to raise rates with wage growth so stagnant, fearing what a further squeeze on household income would do to the U.K.'s consumer spending-reliant economy. Such earnings index figures as we are expecting to get this morning, then, are a blow to sterling's rate hike hopes." -- Connor Campbell, financial analyst, Spreadx

Pound slide: Even though a BOE rate hike would likely support a move higher for sterling, the pound on Wednesday fell to $1.3177. It extended losses logged in its slide to $1.3190 late Tuesday in New York, its lowest since Oct. 9, according to the WSJ Market Data Group.

While the pound's drop has fueled growth in price inflation, it has also helped boost shares of multinational companies that make most of their earnings in overseas markets.

Among these, shares of high-end apparel and accessories maker Burberry Group (BRBY.LN) rose 0.9%, security services company G4S PLC (GFS.LN) added 1%, and equipment rental company Ashtead Group PLC (AHT.LN) was p 0.7%.

Stock movers: Reckitt Benckiser Group PLC (RB.LN) shares fell 0.9%. The consumer products company behind brands such as Airwick and Scholl cut its full-year guidance for comparable revenue (http://www.marketwatch.com/story/reckitt-benckiser-cuts-guidance-as-revenue-falls-2017-10-18), after reporting a 1% fall for the third quarter.

Rio Tinto PLC (RIO) (RIO) (RIO) shares were up 0.2% after briefly trading in the red. The mining heavyweight and two former top executives were sued by U.S. regulators (http://www.marketwatch.com/story/sec-sues-rio-tinto-2-former-execs-with-fraud-2017-10-18)on Tuesday over claims they misled investors about the value of Mozambique coal assets obtained in an acquisition that caused huge losses the company.

BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) rose 0.2% as the mining and petroleum company backed its fiscal 2018 guidance. (http://www.marketwatch.com/story/bhp-billiton-backs-guidance-for-fiscal-2018-2017-10-18)

Off the FTSE 100, shares of FlyBe Group PLC (FLYB.LN) dropped 13% after the airline said higher-than-expected maintenance costs will pressure its half-year adjusted pretax profit.

(END) Dow Jones Newswires

October 18, 2017 04:24 ET (08:24 GMT)