LONDON MARKETS: FTSE 100 Climbs To Three-week High

By Carla Mozee, MarketWatch

DIY retailer Kingfisher rises after earnings

U.K. stocks turned higher Tuesday, shaking off worries about Federal Reserve interest-rate rises and instead tracking a rebound in oil prices.

The FTSE 100 closed up 1.4% at 6,219.26, for its highest close since April 29. The London benchmark shed 0.3% on Monday (http://www.marketwatch.com/story/ftse-100-edges-higher-even-as-miners-struggle-2016-05-23), as energy shares were dragged down alongside falling oil prices.

Crude prices were falling early Tuesday, but staged a turnaround in the afternoon, which helped boost stocks across Europe.

Banks were among biggest advancers, with shares of Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) up 4.8%, Barclays PLC (BCS) (BCS) rising 3.2% and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) up 3.1%.

Among other gainers was Kingfisher PLC (KGF.LN), with its shares gaining 3.5%. The home improvement retailer posted 5% growth in group sales (http://www.marketwatch.com/story/kingfisher-sales-up-5-trading-in-line-with-views-2016-05-24) for the first three months of its new financial year and said that trading remains in line with expectations.

"It's too early to see the competitive impact of the sale of Homebase to Wesfarmers earlier this year, but this is set to be an increasing challenge. Kingfisher are nicely placed to benefit from a recovery in France and wider Europe, if and when it happens," said George Salmon, equity analyst at Hargreaves Lansdown, in a note.

Severn Trent PLC (SVT.LN) shares rose 2.4% after the water and wastewater company said its 2016 pretax profit more than doubled (http://www.marketwatch.com/story/severn-trent-pretax-profit-more-than-doubles-2016-05-24) to 322.3 million pounds ($467.1 million).

Mining shares lost ground earlier Tuesday and ended mixed, as investors worried about the prospect of a U.S. interest-rate increase in coming months, which could result in higher borrowing costs for emerging markets.

Fresnillo PLC (FRES.LN) lost 3.3%, Randgold Resources Ltd. (RRS.LN) (RRS.LN) fell 3.2%, while Anglo American PLC (AAL.LN) gained 1.7%. Rio Tinto PLC (RIO) (RIO) (RIO), which announced it has appointed a new head of technology and innovation, saw its shares turn up 1%.

The market is now pricing in a 46% chance of a July rate hike from the U.S. Federal Reserve, according to the CME Group's FedWatch tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html). The chance of a June hike is at 30%.

"It's the fear of a rate hike from the Federal Reserve next month that really does seem to be calling the shots right now, so although the economic data that's due from the U.S. later today is relatively low key, we should expect this to be under a degree of scrutiny," said Tony Cross, market analyst at Trustnet Direct, in a note.

Pound: The pound climbed to $1.4623 as investors reacted to a new poll that indicated most Britons will choose to stay (http://www.marketwatch.com/story/pound-rises-as-poll-shows-brexit-support-waning-2016-05-24) in the European Union in upcoming in/out referendum next month.

(END) Dow Jones Newswires

May 24, 2016 12:14 ET (16:14 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.