U.K. stocks fall even as the pound drops after weak reading for wage growth
U.K. stocks finished lower Wednesday, even as the pound lost ground after a downbeat labor-market update.
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The FTSE 100 index closed down 0.3% at 7,379.70, with mining stocks showing the biggest losses, but the blue-chip gauge managed to end off session lows.
Sterling dropped below $1.33 after the release of unemployment and wages data, having traded around its highest level in a year against the U.S. dollar earlier in the session.
On Tuesday, the FTSE 100 shed 0.2% (http://www.marketwatch.com/story/uk-stocks-edge-higher-but-strong-pound-keeps-a-cap-on-gains-2017-09-12), after a report showed inflation rising to 2.9% (http://www.marketwatch.com/story/uk-inflation-picks-up-pace-testing-boe-patience-2017-09-12).
Economic data: The Office for National Statistics said Wednesday that wage growth in the three months to July rose 2.1%, including and excluding bonuses. That's compared with expectations for growth of 2.3% for pay with bonuses and 2.2% without, according to a FactSet poll of analysts.
The unemployment rate for the period fell to 4.3% from 4.4%. (http://www.marketwatch.com/story/uk-jobless-rate-real-wage-growth-declines-2017-09-13)
The pound stepped back (http://www.marketwatch.com/story/dollar-flips-higher-vs-pound-as-uk-wage-data-disappoint-2017-09-13) after the data release, recently buying $1.3218. Earlier Wednesday, it hit an intraday high of $1.3329, compared with $1.3284 late Tuesday in New York.
"The failure of U.K. wage growth to keep up with the incessant rise in U.K. inflation is creating a widening gap which will drive down real incomes, hurting consumption-driven economic growth," said Joshua Mahony, market analyst at IG, in a note.
The Bank of England, led by Gov. Mark Carney, is slated to release an update on monetary policy Thursday. The central bank is expected leave the key interest rate at 0.25%.
Pound pressure: But sterling's strength in recent sessions was still weighing on shares of U.K.-listed multinational companies, whose revenue and earnings prospect are squeezed if the pound rises.
Among them, shares in Johnnie Walker whiskey maker Diageo PLC (DEO) lost 0.8%, and drugmaker GlaxoSmithKline PLC (GSK.LN) gave up 0.4%.
Miners hit: Miners made up the FTSE 100's three biggest losers on Wednesday as metals prices slumped across the board (http://www.marketwatch.com/story/gold-prices-snap-brief-slide-take-new-aim-at-one-year-highs-2017-09-13), with Antofagasta PLC (ANTO.LN) down 3.9%, Fresnillo PLC (FRES.LN) off 3.6% and Anglo American PLC (AAL.LN) shedding 3.2%.
"The deterioration in both precious and industrial metals dragged the likes of Antofagasta, Anglo American, Fresnillo and Glencore to the bottom of the leaderboard," Mahony said. "Copper was today's big loser amongst a sea of red for metals."
Other movers: Shares in easyJet PLC (EZJ.LN) rose 0.7%. The discount airline will start offering connecting services to long-haul carriers (http://www.marketwatch.com/story/easyjet-to-sell-seats-on-partner-long-haul-flights-2017-09-13) flying to the U.S. and other destinations, expanding the network of cities that international passengers can reach on a single ticket.
Other gainers included British Airways parent International Consolidated Airlines Group (IAG.LN) as its shares rose 0.4%.
(END) Dow Jones Newswires
September 13, 2017 12:13 ET (16:13 GMT)