LONDON MARKETS: BP Shares Soar, But Fail To Keep FTSE 100 Aloft As Pound Proves A Drag

By Carla Mozee, MarketWatch Features Dow Jones Newswires

BP shares hit 3-year high, helping keep blue-chip benchmark set for 7th monthly gain in 8

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U.K.'s blue-chip stocks struggled to keep a grip on gains Tuesday, pulled toward the flatline as the pound rose on hopes for the Brexit talks.

Also weighing on the FTSE 100 was a fall in Burberry Group PLC shares after a key executive's departure.

At the same time, BP PLC shares rose after a well received earnings report, which should help the London benchmark finish higher for the month of October.

What markets are doing: The FTSE 100 index was up 2 points at 7,489.66, dipping in and out of negative territory after being up as much as 0.4% earlier in the session. On Monday, the index fell 0.2% (http://www.marketwatch.com/story/ftse-100-set-for-first-loss-in-3-sessions-as-homebuilders-hsbc-fall-2017-10-30).

The basic materials and consumer goods sectors were among the decliners Tuesday. But those moves were largely offset by gains for the oil and gas, utility, financial and consumer services groups.

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The benchmark tipped into the red by 0.1% during afternoon trade as the pound extended gains against the U.S. dollar and the euro. The pound rose to $1.3252, from $1.3207 late Monday in New York. It has lost roughly 1.2% against the greenback during October. Against the euro, sterling bought EUR1.1382, up from EUR1.1336.

For October, the FTSE 100 was on course to pick up 1.6%, which would be its best monthly performance since May, FactSet data showed.

What's moving markets: The rising pound added to its gains after Reuters reported (http://www.reuters.com/article/us-britain-eu/eus-barnier-is-ready-to-speed-up-brexit-negotiations-idUSKBN1D01QQ?feedType=RSS&feedName=worldNews&utm_source=Twitter&utm_medium=Social&utm_campaign=Feed%3A+Reuters%2FworldNews+%28Reuters+World+News%29)that Michel Barnier, head of Brexit negotiations for the European Union, is preparing to speed up the pace of withdrawal talks with the U.K.

But sterling strength can weigh on shares of multinational companies that generate significant earnings overseas. Among these, shares of tobacco maker Imperial Brands PLC (IMBBY) fell 1.9%, educational materials publisher Pearson PLC (PSON.LN) lost 1.5% and drug maker GlaxoSmithKline PLC (GSK.LN) was off 1.6%.

Investors are also bracing for Thursday's Bank of England meeting, at which Gov. Mark Carney and other policy makers are expected to raise the benchmark interest rate to 0.5%.

Read:5 things investors need to know as the Bank of England prepares for historic rate hike (http://www.marketwatch.com/story/5-things-investors-need-to-know-as-the-bank-of-england-prepares-for-historic-rate-hike-2017-10-31)

What strategists are saying: "Markets still assign an 86% probability that the [Bank of England] will raise rates for the first time in 10 years this Thursday, which means the consequences of not doing so are likely to be brutal on the pound," said CMC Markets chief market analyst Michael Hewson in a note.

Earnings in focus: Investors were sifting through a fresh batch of earnings reports.

Shares of BP (BP.LN)(BP.LN) , the FTSE 100's fourth-largest constituent, climbed 1.5%. They hit their highest level since July 2014 during the session, with a rise of 4% to GBP5.22, after the oil producer said it will restart its share buyback program (http://www.marketwatch.com/story/bp-to-restart-share-buybacks-after-production-rise-2017-10-31).

Shares of WPP (WPP.LN) (WPP.LN) rose 2.9% after falling earlier in the session. The world's largest advertising group said it now expects like-for-like revenue and net sales growth to be broadly flat for the year (http://www.marketwatch.com/story/wpp-like-for-like-sales-fall-turnover-up-2017-10-31).

Croda International PLC (CRDA.LN) shares leapt 3.3% after the specialty chemicals maker backed its full-year guidance (http://www.marketwatch.com/story/croda-saes-rise-backs-full-year-guidance-2017-10-31) and said third-quarter sales rose 6%.

EasyJet PLC (EZJ.LN) shares moved 3.8% higher, marching up alongside a 7% surge in shares of fellow budget carrier Ryanair Holdings PLC . Ryanair stuck with its full-year earnings target (http://www.marketwatch.com/story/ryanair-earnings-fall-sticks-with-guidance-2017-10-31) even after profit was dented by compensation costs for passengers stranded by a scheduling problems.

Stock movers: Burberry (BRBY.LN) shares fell 1.4%, after losing as much as 3.4% intraday. The maker of high-end clothing and accessories said creative head Christopher Bailey will leave at the end of 2018 (http://www.marketwatch.com/story/burberry-creative-head-christopher-bailey-quits-2017-10-31). Bailey last year was forced to relinquish the CEO role.

Royal Mail PLC (RMG.LN) shares dropped 4.3% after the delivery company's rating was started at hold by Berenberg. The investment bank said Royal Mail's core business is facing pressure from an expected decline in addressed mail and other factors, according to Dow Jones Newswires.

Economic data: U.K. consumer confidence slipped in October, according to the GfK index, which declined by one point to minus 10.

"It's no surprise that the Overall Index Score continues to bump along in negative territory this month. As concerns about the wider economic prospects for the U.K. economy dampen our outlook, consumers are showing no real 'get-up-and-go,'" said Joe Staton, head of market dynamics at GfK, in a statement Tuesday.

(END) Dow Jones Newswires

October 31, 2017 11:52 ET (15:52 GMT)