LONDON MARKETS: FTSE 100 Pares Loss, But Pound's Rise Keeps Gain In Check
U.K. GDP stays at 0.2%
U.K. stocks pared declines Friday, finding some relief after the pound pulled back from a six-week high, but blue-chips were still on course for their worst monthly performance in seven.
The FTSE 100 was down 0.1% at 7,343.77. But that's an improvement from a 0.5% loss intraday, courtesy of the pound retreating from trades above $1.13 against the dollar.
The London benchmark can be sensitive to pound moves, as a stronger value of sterling can hurt revenues made overseas by multinational companies when sales are repatriated into local currency.
The pound declined after the final reading of U.K. gross domestic product for the first quarter sat at 0.2%, remaining at a much weaker rate than the 0.7% logged in the fourth quarter of 2016.
"The updated information on how the sectoral pattern of growth fared between January and March reaffirms our view that Q1 data show clear signs of the consumer cash squeeze hitting economic momentum," said Investec economist Victoria Clarke in a note.
The pound was down at $1.2984 compared with $1.3009 late Thursday, the highest New York settlement for sterling since May 19. Sterling bought as much as $1.3031 Friday before the GDP report was released.
Some so-called dollar-earners advanced with the pound lower. Luxury goods maker Burberry Group Ltd. (BRBY.LN) was up by 1.6% and specialty chemicals maker Mondi PLC (MND.JO) was gaining 1%.
But sterling was still up roughly 2% for the week versus the greenback.
On Friday, oil and gas and tech shares were down the most Friday, while industrial, basic material and consumer-related stocks pushed higher.
For the week, the blue-chip index was on course to lose 1%, putting it in line for a June fall of 2.2%. That would mark its worst monthly loss since November 2016.
The benchmark is facing a rise of only 0.4% for the second quarter, and is looking a first-half gain of 3%.
BOE fallout: The pound's rise above $1.30 came in part after Bank of England Gov. Mark Carney this week hinted at an interest-rate increase (http://www.marketwatch.com/story/boe-chief-carney-hints-at-rate-rise-2017-06-28).
The signals coming out of the BOE have prompted UBS to drop its forecast for further monetary easing in the U.K.
"This change of call is entirely a response to the recent change in tone of several [Monetary Policy Committee] members, and in no way a sign that our expectations for the U.K. economy have improved," wrote UBS strategist John Wraith in a Thursday note.
"On the contrary, we are increasingly convinced the slowdown seen in Q1 2017 is set to persist and probably intensify over the period to the U.K.'s EU exit at the end of Q1 2019," he said.
Read:Central banks set up investors for a long, hard road back to 'normal' (http://www.marketwatch.com/story/investors-face-a-long-hard-road-back-to-normal-2017-06-29)
And see:Here's why the stock market is spooked by central bankers (http://www.marketwatch.com/story/heres-why-the-stock-market-is-spooked-by-central-bankers-trump-agenda-delays-2017-06-29)
Stock movers: Lloyds Banking Group (LLOY.LN) fell 1%. The lender reportedly missed its own end-of-June deadline (http://www.bbc.co.uk/news/business-40457104) to compensate victims of fraud at HBOS, which it purchased in 2009.
Advancers were led by Royal Mail PLC (RMG.LN) and Standard Life PLC (SL.LN), with the postal carrier up 1.8% and the investment services provider higher by 1.6%.
British Airways parent International Consolidated Airlines Group SA (IAG.LN) rose 1%. The airline's cabin crew is set to begin a 16-day strike on Saturday.
Among decliners, United Utilities Group PLC (UU.LN) fell 2.5% following a downgrade to underperform from outperform at Credit Suisse.
Economic data: Confidence among U.K. consumers soured significantly (http://www.marketwatch.com/story/uk-consumer-confidence-sours-in-june-2017-06-30)in June, a GfK survey published Friday showed, on growing concerns about the economy and their own financial situation.
(http://www.marketwatch.com/story/uk-first-quarter-gdp-growth-revised-down-to-02-2017-05-25)Services-sector activity expanded 0.2% in April, compared with expectations of 0.3% in a FactSet survey of economists.
(END) Dow Jones Newswires
June 30, 2017 10:33 ET (14:33 GMT)