LONDON MARKETS: FTSE 100 Edges Down As Brexit Breakthrough Lifts The Pound

Bank shares rise on Brexit talk news; miners gain on upbeat China data

London-listed bank shares climbed Friday after the president of the European Commission said a breakthrough in the Brexit deadlock had been made, clearing the way for negotiations to move on to the next stage.

But the benchmark FTSE 100 was hurt by the rising pound, which gained more strength after the news.

Elsewhere, mining shares rose after Chinese exports rose for the ninth straight month, blowing past forecasts.

How markets are moving: The FTSE 100 index edged down 1.5 points to 7,319.10, after opening fractionally higher. Financial and basic material shares were among the sectors advancing, but the oil and gas, consumer-related and utility groups were in the red.

On Thursday, the benchmark fell 0.4% (http://www.marketwatch.com/story/ftse-100-heads-for-a-win-even-as-china-warning-drags-down-miners-2017-12-07). For the week, the blue-chip index was on course to rise 0.2%, after falling 1.5% last week.

The pound bought $1.3508 after hitting an intraday high of $1.3521. That compares with $1.3475 late Thursday in New York. Sterling was trading at its highest against the euro in six months, fetching EUR1.1500, more than EUR1.1445 on Thursday.

The 10-year gilt yield rose 6 basis points to 1.312%, according to Tradeweb. Yields rise when prices fall.

What's moving markets: Jean-Claude Juncker, the president of the European Commission, said early Friday that "sufficient progress" has been made (http://www.marketwatch.com/story/breakthrough-on-brexit-terms-opens-way-to-next-phase-of-talks-2017-12-08) on three key issues holding up the Brexit negotiations for the talks to advance to the next stage.

"I believe we have now made the breakthrough we needed," Juncker said at a press conference in Brussels.

The announcement comes after a night of intense negotiating for British Prime Minister Theresa May, who managed to resolve the final issue -- the Irish border -- needed to satisfy the EU side.

The Brussels negotiating team is now recommending that EU leaders give the go-ahead for the next stage when they meet Dec. 14-15.

A move to the second stage of talks would reduce the chances of the U.K. exiting the bloc without a deal in 2019.

But the FTSE 100 was hampered by pound strength, as roughly 75% of revenue for companies listed on the London index is generated overseas.

What strategists are saying: "Today is a hugely significant step forward towards exiting the EU in 2019, and while both sides will be relieved at the progress, many more tough negotiations lie ahead. But we can't underestimate how important today is," said Craig Erlam, senior market analyst at Oanda.

But Erlam pointed out that sterling had backed away from stronger gains.

"We've seen a rally in the pound over the last couple of weeks on the expectation of a deal being agreed, so what we may be seeing is simply a case of buying the rumor and selling the fact," he said in a note.

Stock movers: London-listed bank stocks were higher on the Brexit progress, as Friday's breakthrough brightens the prospects the U.K. will maintain strong trade ties with the EU once it has withdrawn.

Barclays PLC (BCS) (BCS) rose 2.1%, and Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) jumped 3%. Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) added 1.6%.

In more modest moves, Standard Chartered PLC (STAN.LN) picked up 0.6%, and HSBC Holdings PLC (HSBA.LN) (HSBA.LN) was up 0.2%.

Shares of miners were mostly higher after fresh data showed Chinese exports and imports grew in October (http://www.marketwatch.com/story/chinas-exports-rise-for-9th-month-in-a-row-2017-12-08). Chinese companies are key buyers of industrial and precious metals.

Miner Fresnillo PLC (FRES.LN) gained 0.8%, and Glencore PLC (GLEN.LN) pushed up 0.6%. But Randgold Resources PLC (RRS.LN) was off 0.8%.

Economic data: An October reading on U.K. industrial production is due at 9:30 a.m. London time, or 4:30 a.m. Eastern Time, from the Office for National Statistics. Growth of 3.6% on an annual basis is expected in a FactSet poll of economists.

Later, investors will shift attention to the U.S., where the monthly jobs report is scheduled for release at 8.30 a.m. Eastern, or 1.30 p.m. London time.

Read:Jobs boom likely carried over into November (http://www.marketwatch.com/story/jobs-boom-likely-carried-over-into-november-2017-12-07)

(END) Dow Jones Newswires

December 08, 2017 04:21 ET (09:21 GMT)