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Aug. 9, 2016, 12:11 p.m. EDT

FTSE 100 notches 4th straight gain, now up 10% in 2016

Pound trades below $1.30 as BOE policy maker says he’s open to more easing

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By Carla Mozee and Victor Reklaitis, MarketWatch


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Retail sales rose in July, a U.K. trade association said Tuesday.

U.K. stocks registered a fourth consecutive gain on Tuesday as retailers rose and the pound continued to drift lower, aiding export-focused companies.

The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.82%  finished up 0.6% at 6,851.30, scoring its best close since June 2015, according to FactSet data. The blue-chip gauge is now up 9.8% for year to date.

Retail shares were mostly higher after the British Retail Consortium said U.K. retail sales rose 1.1% in July, signaling consumers had responded to promotions following the U.K.’s June 23 vote to leave the European Union.

Department store chain Marks & Spencer Group PLC /zigman2/quotes/206225481/delayed UK:MKS -2.91%  picked up 2.4%, clothing retailer Burberry PLC /zigman2/quotes/205386705/delayed UK:BRBY -2.29% ticked up 0.7%, and supermarket chain Tesco PLC /zigman2/quotes/203761082/delayed UK:TSCO -1.27%  added 2.3%.

Among supermarkets, Wm. Morrison Supermarkets PLC /zigman2/quotes/205533138/delayed UK:MRW -1.61%   picked up 1.9% after the company finalized a deal with Ocado Group PLC /zigman2/quotes/207225647/delayed UK:OCDO -1.20%  allowing Morrisons.com to utilize the online grocer’s technology. Ocado shares climbed 6.8% on the midcap FTSE 250 index /zigman2/quotes/210598417/delayed UK:MCX -1.12%  .

/zigman2/quotes/210598409/delayed UKX 6,073.06, -112.56, -1.82%

Economic health and pound: The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2296%  dropped to $1.2988 from around $1.2995 after the release of U.K. economic data for June, which provided a snapshot of conditions largely before the Brexit vote. The British currency then recovered a bit to trade at $1.2999, but that still was down from $1.3037 late Monday in New York.

The U.K.’s trade deficit widened to £12.4 billion ($16.2 billion) from £11.5 billion in May. The trade deficit’s deterioration likely dragged on second-quarter growth, said the Office for National Statistics, which estimates gross domestic product expanded 0.6% during the period.

Industrial production in June rose 0.1%, matching expectations. Manufacturing activity declined 0.3%, more than an expected 0.2% forecast from a FactSet survey.

The pound had already been under pressure after Bank of England policy maker Ian McCafferty said the central bank could continue to cut interest rates to fresh record lows if U.K. economic data worsen. “Bank rate can be cut further, closer to zero, and quantitative easing can be stepped up,” McCafferty wrote in an op-ed for the Times of London newspaper .

His comments arrived just days after the Bank of England unleashed an aggressive easing package, cutting the key interest rate to 0.25% and unveiling a plan to buy £10 billion in corporate bonds.

“McCafferty is considered to be one of the more hawkish members of the committee and was one the four votes against raising the target of QE at the last BoE meeting,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management, in a note.

“Therefore his comments carried more weight with the market and took cable below the key 1.3000 level before London was even ready to deal.”

A decline in the pound’s value has been helpful for many exporters, whose products become less expensive for holders of other currencies. Shares of bottler Coca-Cola HBC AG /zigman2/quotes/200383650/delayed UK:CCH -2.38% added 0.1%, retailer and sugar producer Associated British Foods PLC /zigman2/quotes/204493701/delayed UK:ABF -1.39%  gained 1.5%, and liquor maker Diageo PLC /zigman2/quotes/205611832/delayed UK:DGE -1.81%   /zigman2/quotes/208129584/composite DEO +1.68%   tacked on 0.5%.

Movers: Worldpay Group PLC closed up 2.5% after it posted a rise in first-half profit. The payments processing technology company also declared a first dividend of 0.65 pence.

Standard Life PLC rose 6.8% after the financial services provider posted an 18% rise in underlying first-half operating profit, beating market expectations. But the company said it foresees high uncertainty in the near future after the Brexit vote.

Shares of Smiths Group PLC /zigman2/quotes/208640940/delayed UK:SMIN -2.35%  gained 2.5% after the technology company said revenue for the year ended July 31 is expected to be above expectations.

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Legal & General Group PLC /zigman2/quotes/201125471/delayed UK:LGEN -1.58%  shares fell 5.6%. The financial services provider posted a 9.6% rise in first-half adjusted-operating profit, but the report also contained a £48 million decline in insurance operating profit to £138 million. The company “cannot be immune” to political uncertainty and the outlook for economic growth, said Nigel Wilson, the company’s chief executive, in a statement.

Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC -0.33%   /zigman2/quotes/206581728/composite BCS -2.09%  shares finished up 2.4%. The lender has agreed to pay $100 million to end investigations by 43 U.S. states and the District of Columbia into its alleged manipulation of the London interbank offered rate benchmark in the mid-2000s, authorities said on Monday.

Over in the FTSE 250, William Hill PLC /zigman2/quotes/201135907/delayed UK:WMH -0.62%  closed up 0.5% following a Financial Times report that 888 Holdings PLC /zigman2/quotes/206991878/delayed UK:888 -1.40%  and Rank Group PLC /zigman2/quotes/200887572/delayed UK:RNK +2.65%  have put in a buyout offer of £3.6 billion.

The FTSE 250 finished 0.7% higher, leaving the Brexit-hit gauge up 1.5% for the year.

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6,073.06
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UK : U.K.: London
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/zigman2/quotes/200383650/delayed
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UK : U.K.: London
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Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee. Victor Reklaitis is a London-based markets writer for MarketWatch. Follow him on Twitter @VicRek.

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