Stoxx Europe 600 still on track for weekly decline
Major European stock benchmarks rose Friday, as U.K. stocks gained on a slide in the pound after the U.K.'s general election left the British government with a hung parliament.
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The FTSE 100 in London advanced 0.9% to 7,516.37 (http://www.marketwatch.com/story/ftse-100-futures-swing-higher-as-pound-sinks-to-7-week-low-2017-06-09), on course for its strongest session since May 16, FactSet data showed.
Elsewhere in Europe, Germany's DAX 30 moved up 0.6% to 12,809.49, and France's CAC 40 leapt 0.7% to 5,3012.
"On a day that the most business-friendly party lost its majority, the FTSE 100 was the best performing equity benchmark in Europe. The more domestically focused FTSE 250 felt the brunt of the limited investor backlash. The British stock market managed to capture both the elements of uncertainty and a weaker pound all in one day," said Jasper Lawler, senior market analyst at London Capital Group.
The session got underway with the pound tumbling to a seven-week low against the dollar, below $1.27. That was triggered after Britain's Conservative Party fell short of winning at least 326 seats needed to control the House of Commons. In a hung parliament, no single party has a majority.
See:U.K. election -- So what is a hung parliament? (http://www.marketwatch.com/story/uk-election-so-what-is-a-hung-parliament-2017-06-08)
A weak pound can make shares of multinational companies listed on the FTSE 100 more attractive, as it can help boost their sales by easing selling prices. Among such companies, shares of luxury goods maker Burberry Group PLC (BRBY.LN) popped up 1.9% and building materials supplier CRH PLC rose 2.1%, as did shares of oil producer BP PLC (BP.LN) .
But domestically focused U.K. stocks were hit hard after the election result. That helped limit gains for the broad-based Stoxx Europe 600 . It was up 0.3% at 390.11. But for the week, the index was looking at a 0.6% decline.
Among U.K. stocks on the pan-European benchmark, property developer Berkeley Group Holdings PLC (BKG.LN) suffered a 3.7% loss, Metro Bank PLC (MTRO.LN) fell 2.7%, and retailer Next PLC (NXT.LN) moved 1.6% lower.
"Banks shares were amongst the worst performers, despite the positive implications for foreign earnings because it likely means a longer wait until the Bank of England raises rates," said Lawler.
May called a snap election in April in a bid to strengthen her position before entering negotiations over Britain's exit from the European Union, or Brexit. Despite the poor showing, May said Friday she will form a new government with the support of Northern Ireland's Democratic Unionist Party, which holds 10 seats. The DUP said it would talk to May about an possible arrangement.
See:A hung parliament didn't stop Theresa May from clinging onto power (http://www.marketwatch.com/story/uk-election-so-what-is-a-hung-parliament-2017-06-08)
Also:The U.K. election result could mean a 'softer' Brexit (http://www.marketwatch.com/story/what-will-uk-election-result-mean-for-brexit-2017-06-08)
(END) Dow Jones Newswires
June 09, 2017 10:59 ET (14:59 GMT)