Theresa May ally is sacked; housing stocks fall after new government rule
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U.K. stocks leapt to a record close Thursday, with gains for multinationals helping the blue-chips benchmark overcome a sluggish start marked by gloomy updates about British consumer confidence and private consumption.
How did markets perform?: The FTSE 100 index jumped 1% to settle at 7,601.78, surpassing the previous record close of 7,562.28 logged on Nov. 6, according to FactSet data. Commodity-related stocks rose the most. The utilities sector, however, eased. On Wednesday, the benchmark fell 0.3% (http://www.marketwatch.com/story/ftse-100-adrift-after-hitting-6-week-high-with-imf-to-discuss-view-on-uk-economy-2017-12-20) and snapped a three-session run of wins.
The British pound bought $1.3367, down slightly from $1.3375 late Wednesday in New York. The 10-year gilt yield slipped less than 1 basis point to 1.26%, according to Tradeweb. Yields fall when prices rise.
What's moving markets: A broad-based rally outstripped gains across European stocks and left just a handful of FTSE 100 components in red ahead of Friday's holiday-shortened session.
"The U.K.'s FTSE 100 outperforms ... as the index's plethora of foreign-earning stocks reap the perceived benefits of U.S. President Trump's first legislative victory," in the tax-overhaul bill passed Wednesday by congressional Republicans, said Henry Croft, research analyst at Accendo Markets, in a note.
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London-listed blue-chips seesawed earlier in the session after investors received reports that U.K. consumer confidence dropped to a 4-year low (http://www.marketwatch.com/story/consumer-confidence-in-uk-drops-to-4-year-low-2017-12-20) and that U.K car production fell in November.
GFK UK said its sentiment survey stood at minus 13, which follows a decrease in November. Separately, the Society of Motor Manufacturers and Traders said car manufacturing dropped 4.6% last month. Domestic demand fell 28.1%, exports fell by 1.3%.
"Brexit uncertainty, coupled with confusion over diesel taxation and air quality plans, continues to impact domestic demand for new cars and, with it, production output," said SMMT Chief Executive Mike Hawes in a statement.
Spending by households accounts for roughly 60% of U.K. gross domestic product.
Those updates came after Wednesday's downgrade of the U.K. economy by the International Monetary Fund. It now sees 2017 U.K. growth at 1.6% (http://www.marketwatch.com/story/imf-downgrades-uk-growth-forecast-2017-12-20) and said it expects growth to slow to 1.5% in 2018.
On the political front, U.K. Prime Minister Theresa May's closest political ally, Damian Green, was reportedly sacked from his job as First Secretary of State (https://news.sky.com/story/damian-green-resigns-as-deputy-prime-minister-following-computer-porn-claims-11179042). The move comes after an investigation determined Green made "misleading" statements to parliament stemming from allegations that pornographic material was found on his work computer.
Stock movers: Multinational resource producers, which rake in the bulk of their earnings from overseas, were big winners Thursday. Oil producers Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) and BP PLC (BP.LN) (BP.LN) jumped 2.1% and 1.6%, respectively.
Multinational mining companies also climbed, with BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) closing up 2.4%, Antofagasta PLC (ANTO.LN) up by 1.6% and Rio Tinto PLC (RIO) rising 1.7%.
As well, multinational consumer products maker Reckitt Benckiser Group PLC (RB.LN) rose 2.1%.
Shares of InterContinental Hotel Group PLC (IHG) popped up 2.1% as parent of the Holiday Inn and Crowe Plaza chains, among others, said the U.S. tax-reform bill will cut its effective tax rate by mid- to high-single digit percentage points starting on Jan. 1.
Read:The Trump tax calculator -- will you pay more or less? (http://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26)
Home building stocks fell after the U.K. government said it will ban ground rents for newly built homes. Owners with so-called leasehold contracts own their houses but not the land on which the property stands.
"It's unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms," Communities Secretary Sajid Javid has been quoted as saying. Read:U.K. to clamp down on leasehold contracts (http://www.marketwatch.com/story/uk-to-clamp-down-on-leasehold-contracts-2017-12-21)
Shares of Berkeley Group Holdings PLC (BKG.LN) dropped 1%, Persimmon (PSN.LN) lost 0.8% and Barratt Developments PLC (BDEV.LN) fell 0.2%, paring deeper losses. Taylor Wimpey PLC (TW.LN) gave up 0.3%.
(END) Dow Jones Newswires
December 21, 2017 12:50 ET (17:50 GMT)