LONDON MARKETS: FTSE 100 Edges Lower As Brexit Hopes Buoy Pound

By Carla Mozee, MarketWatch Features Dow Jones Newswires

EasyJet shares climb after financial report

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British blue-chip stocks slipped Tuesday, as the pound gained on hopes a higher divorce payment from the U.K. will unclog the Brexit process, and as investors assessed a round of corporate financial updates.

The lackluster action came after the major U.S. stock gauges closed with wins and Asian equity markets closed mainly higher.

Shares of EasyJet PLC flew up to the top of the London benchmark after the budget airline said passenger traffic rose in the fiscal year.

What markets are doing: The FTSE 100 index shed 0.1% to 7,379.32, as the industrial, consumer services and consumer goods groups fell. Utilities, and oil and gas were among the sectors advancing. On Monday, the benchmark rose 0.1% (http://www.marketwatch.com/story/ftse-100-slips-to-around-2-week-low-as-pound-rises-2017-11-20) . A lower finish on Tuesday would be its seventh in nine sessions.

The pound traded at $1.3265, up from $1.3233 late Monday in New York and higher against most major rivals. But against the euro, sterling fetched EUR1.1279, on par with late Monday.

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A stronger pound acts as a drag on shares of exporters, as it hurts the sterling value of earnings made overseas.

What's moving markets: Sterling broadly held to higher ground after media reports that U.K. Prime Minister Theresa May's cabinet has agreed to increase the amount the U.K. is willing to pay the EU (https://www.theguardian.com/politics/2017/nov/20/theresa-mays-cabinet-agrees-to-pay-more-to-break-brexit-deadlock) on its exit from the bloc. The new "divorce bill" offer could be GBP40 billion ($53 billion) -- twice as much as previously suggested, some reports said.

While the higher offer would require more EU concessions in return, it was being cheered as having the potential to spur the languishing Brexit talks back to life.

Economic docket: U.K. public sector borrowing rose (http://www.marketwatch.com/story/uk-public-borrowing-increases-in-october-2017-11-21) to GBP8.0 billion in October, up GBP0.5 billion from year ago, the Office for National Statistics said.

Investors will assess that reading as they wait for Chancellor Philip Hammond to present his budget for the U.K. on Wednesday.

Members of the Bank of England -- Jon Cunliffe, Ian McCafferty, Michael Saunders and Gertjan Vlieghe -- will appear before the Treasury Select Committee to discuss the central bank's November Inflation Report at 10 a.m. London time, or 5 a.m. Eastern Time.

What strategists are saying: For the FTSE 100, the "near-term outlook remains somewhat unclear although it seems reasonable to assert that a close below 7,350 will represent a significant technical development that would likely be followed by further weakness," wrote Bill McNamara, who runs The Technical Trader daily newsletter.

"The U.K. budget is due tomorrow. Chancellor Philip Hammond is expected to remain cautious on the budget, especially if the U.K. prepares to loosen its purse string to quit the EU in a friendly manner," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

"Of course, the UK's offer may fall short of the EU's demand. The downside risks prevail, and [pound] resistance could be found at 1.3280-1.3300 area," Ozkardeskaya said in a note.

Stock movers: EasyJet (EZJ.LN) shares bounced up 6.6% after the low-cost airline said passenger traffic rose 10% in fiscal 2017 (http://www.marketwatch.com/story/easyjet-net-profit-down-24-passenger-traffic-up-2017-11-21) and that forward bookings for the first quarter of 2018 are ahead of last year. Net profit for the full year fell 24% to GBP325 million ($430 million).

Kingfisher PLC (KGF.LN) shares lost 1.4% after the DIY retailer said like-for-like group sales fell 0.5% (http://www.marketwatch.com/story/kingfisher-sales-fall-but-sticks-with-profit-view-2017-11-21) in the third quarter, reflecting continued weak sales in France.

Compass Group PLC (CPG.LN) shares dropped 3.5%. The move came after the catering-services provider said pretax full-year profit rose 18% (http://www.marketwatch.com/story/compass-profit-up-buoyed-by-n-america-business-2017-11-21), bolstered by its North America business and the pound's slump.

(END) Dow Jones Newswires

November 21, 2017 04:43 ET (09:43 GMT)