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By Josephine Mason
LONDON, Oct 11 (Reuters) - Hopes that Britain will seal a
Brexit deal pushed London-listed companies with exposure to the
domestic economy to a premium over London's blue-chip index for
the first time since May, in a major reversal of fortunes for
the much-shunned market.
JP Morgan's UK domestic plays index that tracks about 30 UK
stocks that make all or most of their revenue at home
was up more than 5% at 1001 GMT, set for its best
day since the basket was created nearly three years ago.
The index was outperforming the FTSE 100 by 2.6%,
rising to a premium over the blue-chip index for the first time
since May.
The gains were driven by housebuilders, Persimmon ,
Barrett and Taylor Wimpey, domestic banks Lloyds
Bank and Royal Bank of Scotland and retailers,
such as Kingfisher which owns DIY chain B&Q.
A JP Morgan index that follows UK-listed companies making
their money abroad was down 0.7% and lagging the
domestic index.
Investor appetite for UK assets surged after British Prime
Minister Boris Johnson and his Irish counterpart Leo Varadkar
said on Thursday they saw "a pathway to a possible deal" ahead
of the Oct. 31 Brexit deadline.
Sterling hit a three-week high late on Thursday, although
the currency had a rollercoaster ride on Friday after comments
from European Council President Donald Tusk tempered some of the
optimism over talks.
The brighter mood was in stark contrast to recent years.
Shares in London-listed companies that rely on the British
economy have suffered since the June 2016 referendum on European
Union membership.
Since May the index has languished at a big discount to the
FTSE-100 and exporters as worries have grown that the country
will crash out of the bloc following the resignation of PM
Theresa May.
The markdown widened following the appointment of staunch
Brexiteer Johnson as prime minister.
(Reporting by Josephine Mason, editing by Julien Ponthus and
Toby Chopra)
