LONDON MARKETS: FTSE 100 Swings Up As Easyjet Rises, Pound Falls After Miss In Retail Sales

Retail stocks struggle

U.K. blue-chip stocks turned higher into Friday's finish, with the swing directed by a drop in the pound after British retail sales fell sharply, while a ratings upgrade left budget carrier EasyJet PLC with its best session in two months.

But retail stocks were stuck in the red after the poor December sales data, and energy shares declined alongside falling oil prices.

How markets are moving: The FTSE 100 index rose 0.4% to end at 7,730.79, digging out an earlier deficit, albeit a small one. Advancers were led by the consumer goods and health care groups, but the oil and gas, telecom and utility groups lost ground. Friday's win was the first in five sessions.

But for this week, the index ended lower by 0.6%, the first such loss in seven weeks.

The pound traded at $1.3858 after losing grip of the $1.39 handle. Sterling late Thursday fetched $1.3895.

Read:Why one contrarian investor says the British pound could rally to $1.40 in 2018 (http://www.marketwatch.com/story/why-one-contrarian-investor-says-the-british-pound-could-rally-to-140-in-2018-2018-01-17)

What's driving markets: The FTSE 100, which is heavily weighed by multinational companies, found some relief Friday when the pound pulled back from its strongest levels in more than three years. A weaker pound can help companies when they convert profit made overseas back into sterling. Among such multinationals, British American Tobacco PLC (BATS.LN) jumped 2.3% and Lysol maker Reckitt Benckiser Group PLC (RB.LN) rose 1.8%.

Sterling fell after U.K. government data showed retail sales in December sank 1.5% (http://www.marketwatch.com/story/uk-retail-sales-drop-sharply-in-december-2018-01-19), a bigger-than-anticipated drop for the period that included the crucial Christmas shopping season. Britons pulled back on spending after after snapping up Black Friday discounts in November.

Retail stocks struggled after the data as well as beforehand, as a profit warning sent shares of flooring seller Carpetright PLC (CPR.LN) sliding 39%, while Bonmarche Holdings PLC (BON.LN) posted a sharp drop decline in like-for-like sales (http://www.marketwatch.com/story/bonmarche-sales-drop-55-backs-yearly-view-2018-01-19) in the quarter that ended in December. Shares of the apparel retail, which are not in the FTSE 100, slumped 17%.

U.K. and European stocks during Friday's session outperformed stocks in the U.S., where a government shutdown could take place on Saturday.

Read:What happens with stocks when the government shuts down (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2018-01-16)

What strategists are saying: "It's another bad day for the U.K. high street with more profit warnings," said Mike Van Dulken, head of research at Accendo Markets, in a note said such updates "add to a stream of negative New Year messages from management about poor footfall, cost conscious consumers and growing preference for online versus in-store."

Stock movers: EasyJet PLC (EZJ.LN) rallied 4.7%, the best session since Nov. 21, after a ratings upgrade to overweight from equal-weight at Morgan Stanley, which in a note about the European airline industry said it prefers low-cost carriers into 2018. EasyJet joins Ryanair Holdings PLC (RYAAY) as Morgan Stanley's preferred stocks for this year.

"Shorthaul industry consolidation, movement of tour operator capacity and strong EUR/GBP are key factors behind our view," wrote analyst Penelope Butcher.

DIY retailer Kingfisher PLC shares (KGF.LN) were pulled down 2.3% after Carpetright's profit warning.

Elsewhere in the retail group, Marks & Spencer Group (MKS.LN) (MKS.LN) fell 0.7% and clothing and accessories seller Next PLC (NXT.LN) dropped 1.7%. Bucking the weaker trend, luxury goods maker Burberry Group PLC (BRBY.LN) (BRBY.LN) rose 0.5%. But those shares slid more than 10% this week, hit after Burberry said quarterly sales fell 2% (http://www.marketwatch.com/story/burberry-retail-sales-slip-backs-2018-guidance-2018-01-17).

Among supermarkets, Tesco PLC (TSCO.LN) fell 0.9%. But J Sainsbury PLC (SBRY.LN) and Wm Morrison Supermarkets (MRW.LN) turned higher, with shares in each ending up by 0.1%.

AstraZeneca PLC (AZN.LN) picked up 1.3% as the drugmaker said two new drugs -- Lynparza tablets for advanced ovarian cancer and its Fasenra treatment for bronchial asthma-- won regulatory approval in Japan (http://www.marketwatch.com/story/astrazeneca-says-2-new-drugs-get-approval-in-japan-2018-01-19).

Shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 1.3% and 0.4%, respectively, as oil prices slid, sending Brent futures below $69 a barrel (http://www.marketwatch.com/story/oil-prices-sink-1-head-for-biggest-weekly-loss-since-oct-2018-01-19).

(END) Dow Jones Newswires

January 19, 2018 13:01 ET (18:01 GMT)