LONDON MARKETS: FTSE 100 Advances After Revival Of U.S. Tax-hopes

By Carla Mozee, MarketWatchFeaturesDow Jones Newswires

U.K. blue-chip stocks rose Monday, riding up alongside U.S. stock futures as investors prepared for the possibility a tax overhaul will be passed by lawmakers in the U.S. this week.

But the benchmark FTSE 100 pared gains in part as the pound gained against the dollar.

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What markets are doing: The FTSE 100 index was up 0.3% at 7,513.59, with but the oil and gas sector moving higher. The industrials, tech and basic materials sectors gained the most. 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 $1.3358, up from $1.3322 late Friday in New York. Against the euro, sterling traded hands at EUR1.1328 versus EUR1.1340 on Friday.

The 10-year gilt yield fell 1 basis point to 1.14%, according to Tradeweb. Yields fall when prices rise.

What's moving markets: "Hopes that the U.S. tax reform bill is clearing the final stages of Congress have helped boost stock markets around the world. The FTSE took the lead from Asia overnight and has started the penultimate trading week of the year, on the front foot," said Fiona Cincotta, senior market analyst, at City Index, in a note.

Gains in Asia and throughout Europe were followed up by advances in U.S. stock futures. Futures for the Dow Jones Industrial Average surged more than 100 points and indicated equity benchmarks are on track for fresh record highs (http://www.marketwatch.com/story/dow-sp-500-ready-to-power-to-new-records-on-fresh-tax-plan-optimism-2017-12-18).

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) that Republican-led 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.

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)

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.

"Whilst the U.S. futures are charging higher, the pockets of concerns are showing through in the U.S. dollar, which is trading weaker across the board in the early part of Monday," said Cincotta.

The pound strengthened against the U.S. dollar which helped pare gains for the FTSE 100. Pound strength can hurt the FTSE 100 as about 75% of revenues for the index's components is made overseas.

Back in London, U.K. Prime Minister Theresa May is scheduled to meet 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. 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."

Stock movers: Bank stocks worldwide have been among big beneficiaries from prospects of tax cuts and reforms in the U.S. But in London Monday, bank stocks were mixed. HSBC Holdings PLC (HSBA.LN) (HSBA.LN) was up 0.3% and Barclays PLC (BCS) (BCS) rose 0.5%, but Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) was off 0.5%.

Weighing on the FTSE were oil and gas shares, with BP PLC (BP.LN) (BP.LN) down 0.1% and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) off 0.3% even as Brent crude futures and crude oil futures were up roughly 1%.

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 11% 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 05:14 ET (10:14 GMT)