(Alliance News) - Stocks in London ended mostly higher on Friday as the pound's slump provided a boon for the FTSE 100 in a week dominated by heightened tension between the UK and Europe, as the clock ticks down to secure a Brexit deal.
The FTSE 100 index closed up 28.77 points, or 0.5%, at 6,032.09, ending the week up 3.1%. The FTSE 250 ended down 18.08 points, or 0.1%, at 17,555.87, ending the week up 0.6%. The AIM All-Share closed down 1.26 points, or 0.1%, at 954.09, ending the week up 0.2%.
The Cboe UK 100 ended up 0.5% at 601.86, the Cboe UK 250 closed down 0.1% at 14,982.94, and the Cboe Small Companies ended down 0.2% at 9,529.54.
In European equities on Friday, the CAC 40 in Paris ended 0.2% higher but the DAX 30 in Frankfurt shed 0.1%.
"It is an unprecedented time for investors, but seeing the FTSE 100 as the star performer of the week must come as shock to even the most grizzled veteran. It is not all down to the pound’s weakness; China-related stocks like Burberry and mining names are rallying today, providing some real weight to the move, but ultimately UK investors will probably thank the UK government for pushing down sterling and allowing the FTSE the room to recover 6,000," said IG Group's Chris Beauchamp.
"Given time, however, we can expect the index to return to its dismal ways, as the global investing community picks the more solid performers on Wall Street over an increasingly fraught UK outlook," he added.
On the London Stock Exchange, Aviva ended the best blue-chip performer, up 5.0% after the insurer agreed to sell a majority stake in its Singapore unit in a deal which the company explained will bolster its finances and aid in its bid to reduce debt.
In a move to appease disgruntled investors, last month new Chief Executive Officer Amanda Blanc stamped her authority on the insurer by announcing it would reduce its focus on Asia and Europe in a strategy shift, to instead focus on the UK, Ireland and Canada.
Aviva said it will net SGD2.7 billion, about GBP1.6 billion, from the consortium of buyers, led by Singapore Life. The deal will create one of Singapore's "leading insurance companies".
Rio Tinto closed up 4.4% despite the Anglo-Australian miner parting company with Chief Executive Officer Jean-Sebastian Jacques after the destruction of the historical aboriginal sites at Juukan Gorge in Pilbara, Australia.
Jacques will, by mutual consent, resign from his role with effect on March 31, or earlier should a successor be appointed before then.
In May, Rio Tinto had blasted rock shelters in the Juukan Gorge in Western Australia's remote Pilbara region, destroying one of the earliest known sites occupied by Australia's indigenous people in order to expand its iron ore mine.
Following a board review in August, the group said it had engaged extensively with shareholders, some of which had expressed concerns about executive accountability for the failings identified.
London Stock Exchange Group closed up 1.6%. Pan-European stock market operator Euronext said it is in negotiations with LSEG to buy the Milan stock market.
Euronext - which operates the stock exchanges of Amsterdam, Brussels, Dublin, Lisbon, Oslo and Paris - confirmed in a statement "it is currently in discussions with Cassa Depositi e Prestiti to submit an offer to London Stock Exchange Group for the acquisition of the business and key operational assets of Borsa Italiana."
"A further announcement will be made as and when appropriate," it said.
The pound was quoted at USD1.2783 at the London equities close, sharply lower from USD1.2877 at the close Thursday, as tensions between the UK and EU continued to intensify with a post-Brexit trade deal hanging in the balance.
In the latest developments, Downing Street on Friday insisted a post-Brexit free trade deal with the EU is still possible despite an increasingly bitter war of words with Brussels amid the threat of legal action.
The European Commission has given the UK until the end of the month to drop legislation enabling ministers to override provisions in the Brexit Withdrawal Agreement relating to Northern Ireland.
Following a stormy meeting in London on Thursday, the commission warned the UK was putting trade talks at risk and said it would "not be shy" of taking legal action. In response, cabinet office minister Michael Gove insisted the government "could not and would not" drop measures in legislation tabled earlier this week.
Prime Minister Boris Johnson's official spokesman Friday reiterated the UK government's position that the provisions in the UK Internal Market Bill remained "critical" to the preservation of the Northern Ireland peace process.
He said the UK would continue to strive for an agreement and called on the EU side to show greater "realism".
"We have engaged constructively with the EU throughout this process. We have negotiated in good faith and we will continue to do so," the spokesman said. "We do still believe that there is a deal to be reached. We will work hard to achieve it."
But amid the worsening atmosphere between London and Brussels, it emerged the EU had even raised the prospect that it could block exports of animal products from the UK once the current Brexit transition period comes to a close at the end of the year.
The EU Chief Negotiator Michel Barnier said "more clarity" was needed if Britain was to receive the "third-country listing" entitling it to export animal products to the EU.
"With Covid cases beginning to rise, and trends following what we are seeing in more 'mature' covid countries like Italy and Spain, things aren't looking good for the UK or it's economy, clearly reflected by the lack of confidence being shown in its currency," said analysts at OFX.
However, the Brexit-battered pound rose to an intraday high of USD1.2866 in early trade - finding some fleeting support after encouraging UK economic growth figures.
UK gross domestic product rebounded in July, following two consecutive quarterly falls, but has still only recovered just over half of the lost output caused by the coronavirus, the Office for National Statics said Friday.
Monthly gross domestic product grew by 6.6% in July as UK lockdown measures continued to ease, following growth of 8.7% in June and 2.4% in May - which followed a record fall of 20% in April.
Analysts at ING said: "The UK economy rebounded strongly for the second month in July, although this mainly reflects the reopening of various social-sectors. We're likely to see the pace of expansion slow in August/September and stall as we head into the winter as the 'mechanical rebound' ends and unemployment rises.
"We think the overall size of the UK economy is unlikely to return to pre-virus levels until late 2022, or perhaps later. This in turn will increase the pressure on the Bank of England to increase their stimulus package at the November meeting."
The euro stood at USD1.1836 at the European equities close, down from USD1.1880 late Thursday. Against the yen, the dollar was trading at JPY106.18, flat from JPY106.20.
Stocks in New York were rebounding at the London equities close after ending sharply lower on Thursday, with technology stocks in the green amid positive earnings from Oracle.
The DJIA was up 1.0%, the S&P 500 index up 0.6% and the Nasdaq Composite up 0.5%.
Oracle was up 3.2% on Wall Street after the tech company late Thursday reported better-than-expected results following strong sales for its cloud applications in the second quarter.
On the economic front, consumer prices in the US rose further in August, the Bureau of Labor Statistics reported, with used cars and trucks, and fuel prices surging.
The consumer price index increased 0.4% month-on-month in August on a seasonally adjusted basis after rising 0.6% in July. Over the last 12 months, the index increased 1.3% before seasonal adjustment.
According to FXStreet, the market had expected a 0.2% month-on-month growth and a 1.2% increase year-on-year.
The monthly increase was driven by a sharp rise in the prices of used cars and trucks, with gasoline, shelter, recreation, and household furnishings prices also increasing.
Brent oil was quoted at USD40.22 a barrel at the London close, down from USD40.50 at the close Thursday.
Gold was quoted at USD1,950.07 an ounce at the London equities close, lower against USD1,957.51 late Thursday.
The economic events calendar on Monday has eurozone industrial production figures at 1000 BST.
The UK corporate calendar on Monday has annual results from Abcam and MJ Gleeson. There are also interim results from Costain Group and MP Evans.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Aviva (AV.)
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