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(Alliance News) - The week started off on a largely downbeat note for equities in London, but the pound raced ahead as the dollar came under pressure on Monday.
Also weighing on the FTSE 100 were share price retreats for Melrose Industries and Flutter Entertainment.
The FTSE 100 index closed down 19.45 points, or 0.3%, at 7,000.08. The FTSE 250 ended down 31.32 points, or 0.1%, at 22,490.86, and the AIM All-Share closed down 2.40 points, or 0.2%, at 1,251.85.
The Cboe UK 100 ended down 0.1% at 697.14, the Cboe UK 250 closed up 0.2% at 20,149.58, and the Cboe Small Companies ended down 0.1% at 14,492.02.
In European equities on Monday, the CAC 40 in Paris ended up 0.2%, while the DAX 30 in Frankfurt fell 0.6%.
"The pound went on a tear this Monday, using a quiet session to indulge in some economic optimism following the first weekend under the latest set of eased restrictions in the UK," said Connor Campbell, financial analyst at Spreadex.
"Sterling was especially strong against the dollar - but then again, what wasn't this afternoon," continued Campbell. "The greenback is having a minor tantrum over the [US] Federal Reserve's insistence that rising inflation will only be temporary, and therefore that the central bank won't be taking any action to combat it."
US Federal Reserve Chair Powell has repeatedly downplayed inflation worries in recent weeks as prospects for US economy have brightened amid an accelerating vaccine roll-out.
The US passed a hopeful milestone as half its adults have had at least one Covid vaccine dose and from Monday all its over-18s will be eligible to get their shot.
The positive news from America - the world's hardest-hit country - comes amid easing restrictions for several European nations and the launch of a quarantine-free travel bubble between Australia and New Zealand. But in India authorities were scrambling to free up hospital beds and secure additional supplies of oxygen and treatment drugs as the vast nation reported a record daily caseload.
With both the pound and euro gaining against the dollar on Monday, European indices came under some pressure, particularly the overseas earnings-exposed FTSE 100 and export-heavy DAX 30.
The pound was quoted at USD1.3984 at the London equities close Monday, within reaching distance of the USD1.40 mark and higher compared to USD1.3821 at the close on Friday.
The euro stood at USD1.2029 at the European equities, up against USD1.1981 at the same time on Friday and breaking through the USD1.20 barrier for the first time in a month.
The Japanese yen also strengthened against the greenback. Against the yen, the dollar was trading at JPY108.06 compared to JPY108.82 late Friday.
Brent oil was quoted at USD66.79 a barrel at the London equities close Monday, firming on USD66.70 late Friday. Gold was quoted at USD1,773.63 an ounce Monday against USD1,778.24 at the close on Friday.
As well as a stronger pound, Melrose Industries was weighing on London's blue-chip stock index at the start of the week.
Melrose shares shed 4.6% after the industrial turnaround specialist said it has entered into an agreement to sell its Nortek Air Management business - comprising the Nortek Global HVAC and Air Quality & Home Solutions segments - to Chicago, US-based Madison Industries for GBP2.62 billion.
The FTSE 100 constituent intends to use part of the net proceeds to reduce debt. It plans to contribute around GBP100 million to the GKN Ltd UK defined-benefit pension schemes, which means that the funding deficit will have been reduced from GBP1 billion to GBP200 million under its ownership.
Also finishing lower in London was Flutter, down 3.4%. Sky News reported Friday afternoon that Flutter has hired investment bank Moelis & Co to advise on the sale of Oddschecker, a betting odds comparison site.
Citing "City sources", Sky said the business, which was set up in 1999 and has had several owners, could sell for about GBP150 million.
Dragging on the FTSE 250 was Energean, finishing down 5.1% as it reported a drop in sales and a wider loss in 2020.
Revenue fell 63% to USD28.0 million from USD75.7 million the previous year. The company made a pretax loss of USD113.6 million, worsened from a USD104.3 million loss in 2019, as low oil and gas prices hit the exploration and production company.
The London-based company, with operations in the eastern Mediterranean and North Sea, said it built momentum in 2020, and this has continued into 2021. It is focused on the first delivery from its flagship Karish gas development in Israel in the first quarter of next year, which will help its target of paying a "meaningful and sustainable dividend" starting in 2022.
Turning to New York as earnings season continues, Coca-Cola shares were up 1.0% after the soft drinks giant backed its annual guidance and posted a first-quarter revenue hike, though a decline in one-off gains weighed on profit.
The company's revenue grew 4.9% annually to USD9.02 billion in the three months ended April 2, from USD8.60 billion. Pretax profit fell 8.2% to USD2.76 billion from USD3.01 billion.
Earnings per share fell 19% to USD0.52. Both Coca-Cola revenue and EPS beat consensus, cited by CNN. The Atlanta-based firm was expected to post first-quarter sales of USD8.7 billion and an EPS of USD0.50.
Coca-Cola's moderate gains compared well with a red start to the week for Wall Street.
Stocks in New York were lower at the London equities close, with the DJIA down 0.4%, the S&P 500 index down 0.5%, and the Nasdaq Composite falling 1.1%.
After a "lull" in the corporate calendar on Monday, said IG, thinks look to pick up in the days ahead.
"Netflix's figures tomorrow promise a return to a more exciting period and a shift away from the bank-dominated opening days of reporting season. Investors will hope that earnings reports can provide fresh support in the other sessions of the week, given that the market is currently trading on high valuations and expectations and thus remains at risk of a sudden decline," said Chris Beauchamp, chief market analyst at IG.
Tuesday's UK corporate calendar has half-year results from Primark clothing retailer Associated British Foods, first quarter results from cybersecurity firm Avast and full-year results from greeting cards retailer Card Factory.
The economic calendar on Tuesday has the latest interest rate decision from the People's Bank of China overnight. Later, UK jobs data is out at 0700 BST, while German producer prices are set for release at the same time.
By Lucy Heming; lucyheming@alliancenews.com
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