EUROPE MARKETS: FTSE 100, Pound Rise As Services Data Come In Strong

By Carla Mozee and Sara Sjolin, MarketWatch

U.K. stocks rose Wednesday, with the pound also climbing, on strong services-sector data, coming a day before Britons head to the polls for the country's general election.

The FTSE 100 ended 0.1% higher at 6,933.74. It had been in and out of positive territory with the broader European equity market (http://www.marketwatch.com/story/european-stocks-volatile-as-bond-yields-spike-euro-rises-2015-05-06), as investors assessed a recent climb in both bond yields and the euro.

On the currency market, sterling (GBPUSD) rose to $1.5232 after data firm Markit said its purchasing managers index for U.K. services activity hit an eight-month high, at 59.5. That outstripped the forecast of 58.5 from a FactSet survey of analysts. The pound late Tuesday was at $1.5184.

The services reading was the last piece of data to roll out before the general election. Polling suggests neither the Conservative Party, known as the Tories, nor the Labour Party will win the 326 seats needed for a majority.

"Now we just have to wait and see how the vote pans out and what coalition government will rule," said Craig Erlam, senior market analyst at Oanda, wrote Wednesday. "At this stage, it seems that while the Tories may win the most seats, the biggest majority that exists is an anti-Tory one, which could mean Conservatives have more seats but [Labour leader] Ed Miliband becomes prime minister."

The FTSE 250 dropped 0.2% to 17,412.08. Constituents on that midcap index are seen as having greater exposure to the British economy than those on the blue-chip FTSE 100.

Read: Pound could drop to $1.39 on U.K. election uncertainty, says Morgan Stanley (http://www.marketwatch.com/story/pound-could-drop-to-139-on-uk-election-uncertainty-says-morgan-stanley-2015-05-05)

Movers: Imperial Tobacco (ITYBY) shares picked up 1.8% as the company, whose brands include Davidoff and JPS, said first-half net profit jumped to 853 million pounds (http://www.marketwatch.com/story/imperial-tobacco-profit-rises-3-2015-05-06). It also said it expects its $7.1 billion deal to buy a number of cigarette brands from Reynolds American Inc. and Lorillard Inc. to receive regulatory approval within the next several weeks.

J Sainsbury PLC shares lost initial gains and moved 3.2% lower. The company said full-year underlying profit, which excludes one-time items and pension expenses, fell 15% to GBP681 million (http://www.marketwatch.com/story/j-sainsbury-posts-first-profit-drop-in-a-decade-2015-05-06). The figure was above Reuters forecasts for GBP659 million.

The full-year drop in underlying profit, the first for Sainsbury's in a decade, comes during an intense price war among Britain's largest grocers. They are coming under pressure from low-cost supermarkets such as Aldi and Lidl, which said Wednesday they had increased market share (http://www.marketwatch.com/story/aldi-lidl-add-uk-market-share-sales-hit-record-2015-05-06) and sales.

Sage Group PLC topped the FTSE 100, rising 8% after the business software and services firm backed its 2015 forecast (http://www.marketwatch.com/story/sage-profit-revenue-rise-reaffirms-2015-guidance-2015-05-06)and posted a rise in half-year profit.

Shares of GlaxoSmithKline PLC (GSK) climbed 0.9% after the drug giant reported a rise in first-quarter profit (http://www.marketwatch.com/story/glaxo-posts-rise-in-first-quarter-profit-2015-05-06).

Vodafone Group PLC (VOD) gained 1.6% after Exane BNP Paribas raised the telecom firm to outperform from neutral.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires