LONDON MARKETS: FTSE 100 Climbs As Pound Slides On Election Jitters

By FeaturesDow Jones Newswires

Tesco falls after data show loss of market share

U.K. stocks advanced on Wednesday, boosted by a slump in the pound after a new voting estimate showed Theresa May's Conservative Party may lose its majority in the general election next week.

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The FTSE 100 index added 0.2% to 7,540.89, partly recovering from its 0.3% loss on Tuesday. The index was closed Monday for a bank holiday.

For the month of May, the U.K. benchmark was on track for a 4.7% gain, its biggest monthly advance since December last year.

A fall for sterling was seen as driving the market action on Wednesday, with the pound falling to $1.2818 from $1.2860 late Tuesday in New York. The loss came after a YouGov estimate, reported by The Times newspaper, indicated that the Conservatives might lose 20 seats in the June 8 election. That means May's party would lose its current majority in parliament (http://www.marketwatch.com/story/theresa-may-could-lose-majority-in-uk-election-fresh-research-finds-2017-05-31), which is has had since the election in 2015.

Labour, on the other hand, is expected to gain 28 seats. A few weeks ago, the Tories stood to increase their majority substantially and bag a landslide victory. Investors had been pushing the pound above $1.30 on hopes a bigger Conservative majority would strengthen May's hand in the upcoming Brexit negotiations with Brussels.

The YouGov research "distracts from the many [other polls] showing that a Conservative majority remains the most likely outcome, as is our base case. With no further indications of a hung parliament, the recent fall in sterling may be seen as a buying opportunity for investors," said Geoffrey Yu, head of the U.K. investment office at UBS Wealth Management, in a note.

In any case, the pound slide on Wednesday still gave a boost to the FTSE's big multinationals that make the bulk of their earnings overseas. Unilever PLC (ULVR.LN) (ULVR.LN) climbed 1.1%, British American Tobacco PLC (BATS.LN) (BATS.LN) gained 1% and Diageo PLC (DEO) (DEO) climbed 1.2%.

British Airways-parent International Consolidated Airlines Group SA (IAG.LN) (IAG.LN) rose 0.7%, rebounding in part from a 1.4% loss on Tuesday that came after a far-reaching computer failure at BA left thousands of passengers stranded over the weekend.

Read:The bill for British Airways's IT carnage? $111 million, Citi estimates (http://www.marketwatch.com/story/the-bill-for-british-airwayss-it-carnage-111-million-citi-estimates-2017-05-29)

Miners curbed the gains for the FTSE 100 after China's official manufacturing purchasing managers' index was unchanged in May at 51.2 (http://www.marketwatch.com/story/chinese-factory-activity-holds-steady-in-may-2017-05-31). China is a major user of natural resources, so any growth indications from the country tend to drive prices of metals.

Shares of Rio Tinto PLC (RIO) (RIO) (RIO) dropped 2.1%, Anglo American PLC (AAL.LN) fell 1.8% and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) lost 2%.

Also moving lower, shares of Tesco PLC (TSCO.LN) (TSCO.LN) gave up 0.9% after the latest Kantar data on U.K. supermarkets showed the grocer's market share fell to 27.8% in the 12 weeks to May 21, from 28.3% in the previous period.

J Sainsbury PLC's (SBRY.LN) (SBRY.LN) market share fell to 15.9%, but shares were up 0.8%.

(END) Dow Jones Newswires

May 31, 2017 06:33 ET (10:33 GMT)