LONDON MARKETS: FTSE 100 Ends With Small Gain As Pound Jumps On Brexit Hopes

By Carla Mozee and Sara Sjolin, MarketWatch Features Dow Jones Newswires

BP shares ends at 2017 high, helping blue-chip benchmark slightly higher

Continue Reading Below

U.K.'s blue chip stock index ended slightly higher on Tuesday, underperforming the major European markets as the pound rallied on hopes for progress in the divorce talks between London and Brussels. A decline in Burberry Group PLC shares after a key executive's departure also weighed.

What markets are doing: The FTSE 100 index closed 0.1% higher at 7,493.08, extending its monthly gain to 1.6%. That marks its best monthly performance since May.

The benchmark swung between gains and losses throughout the day and tipped into the red by 0.1% during afternoon trade as the pound extended gains against the U.S. dollar and the euro.

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) (IMBBY) fell 2.2%, educational materials publisher Pearson PLC (PSON.LN) lost 1.8% and drugmaker GlaxoSmithKline PLC (GSK.LN) (GSK.LN) ended down 1.1%.

Continue Reading Below

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%.

The pound rose to $1.3278, from $1.3207 late Monday in New York. It has lost roughly 0.9% against the greenback during October. Against the euro, sterling bought EUR1.1389, up from EUR1.1336.

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)

Also:BOE warns Brexit could cost London 75,000 finance jobs: report (http://www.marketwatch.com/story/brexit-could-cost-london-75000-finance-jobs-boe-warns-report-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 1.7% to log their strongest close since January. 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 would 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 3% 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 4.2% 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 3.2% higher, marching up alongside a 6.9% 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%, 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 3.9% 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 13:18 ET (17:18 GMT)