By Carla Mozee, MarketWatch
U.K. stocks ended a highly volatile session slightly lower on Wednesday after the British government laid out plans for spending and taxes as it works to exit from the European Union.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.69% ended roughly 0.1% lower at 7,334.61 for a fifth straight session of losses. That marked the longest losing run for the index since early November.
Budget: U.K. Treasury chief Philip Hammond outlined the last budget before the U.K. begins its flight out of the European Union. He said the 2017 forecast for British economic growth was upgraded, to 2% from a previous estimate of 1.4%. But growth is expected to slow in 2018.
The budget included a reduction in the tax-free dividend allowance to £2,000 ($2,430) from £5,000, and a two-tier sugar tax levy. Soft drinks producers A.G. Barr PLC /zigman2/quotes/206898740/delayed UK:BAG +0.69% and Britvic PLC /zigman2/quotes/208055220/delayed UK:BVIC +1.44% lost 1.3% and 0.8%, respectively.
Hammond also said there will be a £1,000 discount for pubs on business rates, which should affect 90% of pubs in Britain. Shares of Punch Taverns PLC rose 0.9%, but Greene King PLC gave up 0.2%.
“It’s very much a steady-as-she-goes budget for a country that’s about to embark on a very tricky two years,” as Brexit is negotiated, said IG’s chief market analyst Chris Beauchamp.
Sterling: Beauchamp said the higher 2017 growth projection and a lower borrowing outlook helped pull the pound from session lows.
“Borrowing is going to be down and it’s presuming a better outlook for the government on that front. Of course, you worry about whether everything will be quite as strong given Brexit. But certainly the mood music there is strong for the pound,” he said.
Sterling /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0535% was trading at $1.2154, but still down from $1.2200 late Tuesday in New York. The yield on the 10-year gilt /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +6.97% rose further, by 5 basis points at 1.23% as prices fell. Read more in Currencies.
Movers: Mining shares flipped lower, with a climb in the U.S. dollar /zigman2/quotes/210598269/delayed DXY -0.02% hitting dollar-denominated metals prices. Shares of Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL +2.50% fell 1.8%, BHP Billiton PLC /zigman2/quotes/208108397/composite BHP +2.27% /zigman2/quotes/201448516/delayed AU:BHP +0.90% declined 1.2% and Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO +1.86% /zigman2/quotes/202627887/composite RIO +1.08% /zigman2/quotes/200083756/delayed AU:RIO +0.85% was pushed down 0.9%.
But mining shares earlier Wednesday rose after China posted an unexpected trade deficit. The “recent strength of import growth appears to largely reflect a boost to import values from a jump in commodity price inflation,” Capital Economics economist Julian Evans-Pritchard noted Wednesday.
Admiral Group PLC shares /zigman2/quotes/201079056/delayed UK:ADM +0.91% rose 1.7% after the auto insurer said its pretax profit in 2016 fell 24% because of a change in the discount rate used to calculate personal injury damages awards.
Legal & General Group PLC /zigman2/quotes/201125471/delayed UK:LGEN +1.29% raised its dividend, but shares of the company, which provides insurance, savings and investment services, turned lower to close down by 2.1%.
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