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* China factory output climbs for first time in 2020
* UK stocks end week lower on virus woes
* BoE chief says not considering negative interest rates
* FTSE 100 up 1%, FTSE 250 adds 1.7%
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By Shreyashi Sanyal
May 15 (Reuters) - London stocks closed higher on Friday, as
a jump in China's factory output for the first time in 2020
powered resource companies, but the benchmark indices ended the
week lower as fears of the economic fall-out of the coronavirus
weighed.
The commodity-heavy FTSE 100 was up 1%, with miners
including Rio Tinto, Glencore and BHP Group
providing the biggest boosts, while oil major Royal
Dutch Shell rose 2%.
The mid-cap FTSE 250 also rose 1.7% as data showed
China's industrial production climbed a faster-than-expected
3.9% in April as the country returned to work after months of
coronavirus-induced lockdowns.
Still, both the indices logged their first weekly fall in
three as millions of job losses globally and growing U.S.-China
tensions crush consumer demand. U.S. President Donald Trump said
on Thursday he had no interest in speaking to his Chinese
counterpart right now.
"We're in a volatile holding pattern here after the very
significant bump since March," said Willem Sels, global chief
market strategist at HSBC Global Private Banking.
"We can explain most of that by government and central bank
intervention that has almost eliminated the risk of a credit
crisis. But we do think that some of the asset price inflation,
with price/earnings ratios moving to new highs is exaggerated."
London stocks have struggled to build on a strong April
rally this month as investors face worsening economic indicators
and central banks signal a longer-than-expected road to
recovery.
A survey on Friday showed three-quarters of British
manufacturers did not think business will be back to normal
within six months, while HSBC further cut global GDP forecasts
on fears that easing lockdowns would lead to a second wave of
coronavirus infections.
"We just can't afford the risk of lowering the guards too
early, which means we just simply can't go back to normal
anytime soon," Andrea Cicione, head of strategy at TS Lombard,
said.
Cicione said the rebound in stocks from a selloff in March
was mostly driven by central bank liquidity and hopes of a
V-shaped recovery in earnings.
"But now it's kind of dawning on investors that firstly, the
V-shaped recovery is not guaranteed and secondly, we've probably
gone too far too quickly."
A week after investors began betting on negative U.S.
interest rates, Bank of England Governor Andrew Bailey said the
central bank was not considering taking rates below zero,
although he declined to rule it out altogether.
William Hill became the latest company to post a
plunge in revenue as sports betting volumes collapsed and it was
forced to close its retail network of betting shops. But shares
rose 8% amid the broader rally.
BT Group Plc jumped 5.4% as a report said it was in
talks to sell a multi-billion pound stake in its wholly owned
network subsidiary, Openreach, to infrastructure investors to
help fund an ambitious expansion in fibre broadband.
Bus operators Go-Ahead Group, Stagecoach Group
and FirstGroup gained between 4% and 9.5% as
London's transport operator said it had secured 1.6 billion
pounds ($2 billion) in government funding to cover a shortfall
in revenue until October.
(Reporting by Shreyashi Sanyal, Devik Jain and Sagarika
Jaisinghani in Bengaluru; Editing by Bernard Orr, Anil D'Silva
and Barbara Lewis)
