U.K. blue-chip stocks rose Monday, riding up alongside U.S. stocks as investors prepared for the possibility a corporate tax cut will be passed by U.S. lawmakers this week.
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But the benchmark FTSE 100 underperformed the rest of Europe as the pound gained against the dollar.
What markets are doing: The FTSE 100 index ended up 0.6% at 7,537.01, rising for a second straight day and scoring its highest close since early November. On Friday, the London benchmark rose 0.6% (http://www.marketwatch.com/story/ftse-100-struggles-for-3rd-day-as-banks-fall-but-on-course-for-weekly-advance-2017-12-15) and last week logged a rise of 1.3%.
The pound bought $1.3397, up from $1.3322 late Friday in New York. Against the euro, sterling changed hands at EUR1.1351 versus EUR1.1340 on Friday. Pound strength can hurt the FTSE 100 as about 75% of revenues for the index's components is made overseas.
What's moving markets: The moves came after Treasury Secretary Steven Mnuchin on Sunday said he has "no doubt" (http://www.marketwatch.com/story/mnuchin-says-no-doubt-congress-will-pass-tax-bill-this-week-2017-12-17) the Republican-backed tax bill will be passed by lawmakers and make it to President Donald Trump's desk this week to be signed into law. The renewed optimism comes after two holdouts, Sens. Bob Corker of Tennessee and Marco Rubio of Florida, pledged their support for the tax proposals.
Still, there's a slim 52-48 majority for Republicans in the Senate. Sen. John McCain of Arizona, who's battling a brain tumor, is expected to miss the vote (http://www.marketwatch.com/story/sen-john-mccain-wont-vote-on-republican-tax-bill-report-2017-12-17) as he's returning to his home state.
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U.S. also rallied on Monday (http://www.marketwatch.com/story/dow-sp-500-ready-to-power-to-new-records-on-fresh-tax-plan-optimism-2017-12-18), with the Dow Jones Industrial Average within touching distance of the 25,000 milestone.
Read:Here's what's in the Republican tax deal (http://www.marketwatch.com/story/heres-whats-in-the-republican-tax-deal-2017-12-13)
Back in London, U.K. Prime Minister Theresa May met with lawmakers to discuss what's next for the Brexit process after EU leaders on Friday agree to move forward to the second phase of talks. The prime minister told fellow MPs that Britain will be able to get a "bespoke" trade deal with the EU after Brexit, even as the EU's main negotiator Michel Barnier said there was "no way" that would happen.
May, in a column for the Sunday Telegraph (http://www.telegraph.co.uk/news/2017/12/16/getting-job-brexit-will-not-derailed/), said the government "we will not be derailed from this fundamental duty to deliver the democratic will of the British people."
What are strategists saying: "With a week to go till Christmas there's a whiff of Santa rally in the air. Markets should respond well to a 'yes' vote on US corporate tax cuts and possible political agreement to avoid a government shutdown on Friday," said Lee Wild, head of equity strategy at Interactive Investor
"U.K. stocks are better value than their U.S. counterparts and, despite the specter of Brexit horse trading through 2018, there are no obvious banana skins between here and New Year," he added.
Stock movers: Bank stocks world-wide have been among big beneficiaries from prospects of tax cuts and reforms in the U.S. and on Monday in London most bank stocks rose. HSBC Holdings PLC (HSBA.LN) (HSBA.LN) ended up 0.6% and Barclays PLC (BCS) (BCS) rose 1.1% and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) added 0.5%.
Mondi PLC (MND.JO) rose 2.2% after Deutsche Bank raised its rating to buy from hold on the paper and packaging company.
Off the FTSE 100, shares of IG Group Holdings PLC (IGG.LN) tumbled 9.3% after flagging concerns over the European Securities and Markets Authority's tighter-than-expected clampdown on the sector.
(END) Dow Jones Newswires
December 18, 2017 12:24 ET (17:24 GMT)