LONDON MARKETS: FTSE 100 Lower As Bank Stocks Come Under Pressure

By Carla Mozee, MarketWatch Features Dow Jones Newswires

U.K. manufacturing activity at more than 4-year high

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U.K. stocks fell Friday, with bank shares moving lower as trading for December got underway, pulling the blue-chips market potentially further into the red for the week.

What markets are doing: The FTSE 100 index fell 0.2% to 7,315.66, as gains for oil and gas and health care stocks were offset by losses for financial, industrial, consumer-related and other shares. On Thursday, the gauge dropped 0.9% to a two-month low (http://www.marketwatch.com/story/ftse-100-slides-to-2-month-low-as-pound-rallies-on-brexit-hopes-2017-11-30).

The index was on course for a weekly fall of 1.2%, which would be its third weekly loss in four weeks.

The pound traded at $1.3482, down from $1.3529 late Thursday in New York. It fell below the $1.3500 level after the release of U.K. manufacturing data. Against the euro, sterling bought EUR1.1329, down from EUR1.1366.

What's moving markets: U.K. and European equities fell alongside U.S. stock futures , which were losing ground after the U.S. Senate late Thursday suspended a vote on a tax bill as lawmakers continued to debate a number issues related to cutting rates for individuals and corporations.

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Read:Here's what's next for the Senate's tax bill (http://www.marketwatch.com/story/heres-whats-next-for-the-senates-tax-bill-2017-11-30)

Markets are looking more cautious in early moves today as the crucial vote on tax reform has been pushed back.

"Passing tax reform was never going to be a walk in the park," said Richard Perry, market analyst at Hantec Markets, in a note. "If the bill is delayed further there could be a bit of a wobble, whilst if it even gets voted down, there would likely to be a significant correction and reduction in risk sentiment."

The prospect of lower U.S. corporate taxes under the Trump administration has aided bank stocks worldwide at times over the past year. But London-listed lenders were moving lower Friday. As well, shares of Royal Bank of Scotland Group PLC (RBS.LN) fell 1.2% after the company said it will close 259 branches and cut 680 jobs to reduce costs and spur more customers into using mobile and online services.

Investors were also keeping watch on the pound, which pushed above $1.3500 against the U.S. dollar on Thursday. Sterling strength can weigh on the FTSE 100, as around 75% of revenue for the index's components is generated outside of the U.K.

The pound leapt Thursday after The Times newspaper said the U.K. was close to reaching an agreement over Northern Ireland with European Union officials aimed at avoiding a "hard border" between the U.K. province and the Republic of Ireland.

Stock movers: In the banking group, Barclays (BCS) (BCS) fell 1.5%, Lloyds Banking Group (LLOY.LN) (LLOY.LN) was down 1% and Standard Chartered (STAN.LN) gave up 0.6%. But HSBC (HSBA.LN) (HSBA.LN) (HSBA.LN) turned fractionally higher.

Among gainers, BP PLC (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) were up 0.7% and 0.3%, respectively, tracking gains for oil prices after major oil producers on Thursday agreed to extend production curbs through 2018. (http://www.marketwatch.com/story/oil-prices-build-on-gains-after-opec-agreement-to-extend-production-curbs-2017-12-01)

Economic data: IHS Markit/CIPS said its U.K. manufacturing PMI for November was 58.2 (http://www.marketwatch.com/story/uk-manufacturing-pmi-picks-up-in-november-2017-12-01), and that was better than the FactSet estimate of 56.5.

"New orders, employment and growth all increased, and importantly, it appears that U.K. manufacturers have now overcome the effects of the pound's depreciation following Brexit," said Hamish Muress, currency analyst at OFX, in a note.

"However, any strong reaction from the pound was tempered by this morning's eurozone manufacturing figures. Whilst the U.K. may have hit 4-year highs, the eurozone was closer to 17-year highs. Whilst the U.K.'s manufacturing sector may be recovering, this stark contrast in growth shows how 2017 has been the year of the eurozone resurgence," said Muress.

(END) Dow Jones Newswires

December 01, 2017 05:31 ET (10:31 GMT)