Britain's FTSE lags European rally as Brexit talks fail (updated)

HS Govtech Solutions

04/12/2017 17:23

* FTSE 100 up 0.55 pct 
    * U.S. tax reform progress boosts banks 
    * Precious metals miners dumped in risk-on move 
    * Housebuilders benefit from favourable construction data 
 
 (Adds quotes, context) 
    By Kit Rees and Julien Ponthus 
    LONDON, Dec 4 (Reuters) - The UK's top share index rose from 
a two-month low on Monday but lagged behing European peers in a 
broader rally sparked by progress in U.S. tax reforms, as 
Britain and the EU failed to strike a deal on an initial Brexit 
divorce package.  
    The blue chip FTSE 100  .FTSE  index was up 0.55 percent at 
7,340.91 points, a modest performance in comparison with 
France's CAC 40  .FCHI  and Germany's DAX  GDAXI , which were up 
1.3 percent and 1.5 percent respectively. 
    "The late afternoon news about no deal meant that sterling 
surrendered most of its gains, but there was little help for the 
FTSE 100," said Chris Beauchamp, Chief market analyst at IG. 
    British Prime Minister Theresa May failed to strike a Brexit 
divorce deal with EU negotiators in Brussels despite earlier 
reports of a breakthrough agreement that would have kept 
British-ruled Northern Ireland aligned with EU regulations. 
 urn:newsml:reuters.com:*:nL8N1O42P5 
    Last week's strength in sterling on the back of optimism 
over Brexit talks weighed on the FTSE 100, which ended the week 
with a 1.5 percent loss. The index fell to a two-month low as 
its predominantly dollar-earning constituents were hit by a rise 
in the currency. 
    "We are more negative on the UK, we think it will continue 
to lag. It's felt as if the excitement is elsewhere and we don't 
see that changing overnight," said Kevin Gardiner, global 
investment strategist at Rothschild Wealth Management. 
    Financials across Europe were the biggest boost to gains 
after U.S. efforts to slash corporate tax rates cleared a major 
hurdle. 
    In Britain, shares in Barclays  BARC.L , HSBC  HSBA.L , 
Lloyds  LLOY.L  and RBS  RBS.L  rose between 0.4 percent and 2.6 
percent. 
    "For all the other indices around the world, the tax reform 
is something everyone's been keeping an eye on, so that's 
definitely the main driver in the U.S. and I think that's 
trickling over to Europe as well. We're see a bit of a relief 
rally," John Moore, trader at Berkeley Capital, said. 
    Banks are seen as the biggest beneficiaries of a cut in the 
corporate tax rate in the United States, and their shares also 
tend to see the biggest reactions when investors buy into risky 
assets. 
    Conversely, shares in more defensive stocks, such as 
precious metals miners Fresnillo  FRES.L  and Randgold Resources 
 RRS.L , were among the worst performers, both down 2.7 percent 
and 1.2 percent respectively. 
    UK housebuilders got a boost from favourable data showing a  
  a recovery in Britain's construction industry last month. 
 urn:newsml:reuters.com:*:nL9N1LS00T  
    Persimmon  PSN.L , Taylor Wimpey  TW.L  and Barrat 
Developments  BDEV.L  rose between 0.5 percent and 1 percent.   
     
 
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British Stocks vs. Sterling    http://reut.rs/2A192YD 
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 (Additional reporting by Helen Reid; Editing by Matthew Mpoke 
Bigg) 
 ((kit.rees@thomsonreuters.com; +44 207 542 2784;)) 
  
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Keywords: BRITAIN STOCKS/