LONDON MARKETS: Bank Shares Pull Back, Keeping Gain On FTSE 100 In Check

By Carla Mozee, MarketWatch

Benchmark heading toward 3% weekly rise

U.K. stocks were modestly higher Friday, holding around a five-week high, but gains on the benchmark FTSE 100 were limited as bank shares lost ground.

The FTSE 100 was up 0.1% at 6,939.50. The benchmark on Thursday rose 0.4% (http://www.marketwatch.com/story/ftse-100-tilts-lower-with-investors-watching-for-ecb-decision-2016-12-08) to 6,931.55, its highest close since Oct. 31. Thursday's rise was the fourth in the row, the longest run of wins since late September.

Banks stocks were lower early Friday, with Barclays PLC (BCS) (BCS) down 1.8%, Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) off 0.9%, and Royal Bank of Scotland PLC (RBS.LN) 0.3% lower. HSBC PLC (HSBA.LN) (HSBA.LN) was fractionally lower.

Most bank stocks rose Thursday after the European Central Bank said it will keep buying government bonds within the eurozone through December 2017. However, it scaled back the amount to 60 billion euros a month, starting in April. Currently, the ECB purchases EUR80 billion in bonds a month.

European bank shares on Friday took a breather, with the Stoxx Europe 600 Bank Index off 0.3%.

Movers: Joining the financial sector in moving lower were oil and gas shares, and mining stocks. BP PLC (BP.LN) slipped 0.2%, and metals producer Antofagasta PLC (ANTO.LN) fell 1%.

But advancers included Paddy Power Betfair PLC and broadcaster Sky PLC (SKY.LN) , with those shares up 12.8% and 1.3%, respectively.

"The FTSE was just as slow as its eurozone peers [Friday] morning," said Connor Campbell, financial analyst at Spreadex, in a note. However, "if a proper Santa rally is to materialize in the next fortnight, it could well re-cross the 7,000 mark before the year is over."

For the week, the London index is on track to rise 3%. That would be its best week since a 2.97% increase in the week ended Sept. 23, according to FactSet data.

The pound was buying $1.2567, down from $1.2585 late Thursday in New York. A reading on construction output in Britain is due from the Office for National Statistics at 9:30 a.m., or 4:30 a.m. Eastern Time.

Retail: On Friday, Investec in a research note said the retail industry looked set for a better Christmas season than last year's. However, "we are cautious on 2017, expecting softer sales from higher inflation with significant [cost of goods sold] and wage inflation headwinds. Until there is visibility on consumer demand, the sector is likely to underperform."

Investec said Dixons Carphone PLC (DC.LN) was its only buy recommendation on the FTSE 100. The consumer electronics retailer's shares rose 0.8%. Dixons will release a financial update on Wednesday.

Investec also said it recommends selling Next PLC, Marks & Spencer Group PLC and Kingfisher PLC. Shares of Kingfisher (KGF.LN) were up 0.4%, M&S (MKS.LN) edged up 0.2%, and Next (NXT.LN) rose 0.1%.

(END) Dow Jones Newswires

December 09, 2016 03:32 ET (08:32 GMT)

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