LONDON MARKETS: FTSE 100 Logs Best Daily Gain In 5 Weeks As Fed Worry Wanes

By Carla Mozee, MarketWatch

Upbeat commodities put index on track for biggest gain in a month

U.K. stocks finished sharply higher Friday, posting its best session advance in about five weeks, as markets recovered from a selloff sparked by fears that the U.S. Federal Reserve could raise interest rates as early as June.

The FTSE 100 jumped 1.7% at 6,156.32, representing its best one-day gain since April 12, according to FactSet data.

The blue-chip benchmark on Thursday dropped 1.8% (http://www.marketwatch.com/story/ftse-100-slides-to-6-week-low-after-fed-hints-at-rate-hike-2016-05-19) and closed at a two-month low as U.S. Federal Reserve minutes suggested policy makers will increase interest rates as soon as their June meeting.

Friday's advance arrived "as concerns about U.S. rate-hike timing following the release of the latest [Fed minutes] ease into the end of what has been an exciting, yet volatile, week," said Accendo Markets analysts in a note.

The moves were pushing the London benchmark just into positive territory for the week.

Movers: The basic materials and oil-and-gas sectors put in the strongest performances. Commodity shares, which make up about a fifth of the FTSE 100, topped the index in part as the dollar edged lower.

Shares of platinum producer Anglo American PLC (AAL.LN) closed 3.6% higher, Glencore PLC (GLEN.LN) picked up 0.4% and major oil company Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) finished up 1.5% as Brent crude was on the rise, recapturing the $49-a-barrel level at one point.

Rolls-Royce Holdings PLC (RR.LN) shares rose 1.3%, brushing aside a credit ratings downgrade to A- from A by Standard & Poor's. The agency said the increased risk of weaker margins and cash-flow generation at the engine maker during the first half of the year will last longer than anticipated.

On the midcap FTSE 250 , Ladbrokes PLC (LAD.LN) shares rallied 6.5% after a competition regulator released provisional findings of an investigation into a planned merger with Gala Coral Group Ltd. It said the two bookmakers may have to sell up to 400 betting shops for their merger to be conditionally approved. (http://www.marketwatch.com/story/ladbroke-shares-jump-after-cma-outlines-merger-findings-2016-05-20)

Sterling: The pound was trading at $1.4509 compared with $1.4618 late Thursday in New York. Some pressure came after Gertjan Vlieghe, a member of the Bank of England's Monetary Policy Committee, said as the U.K. economy is losing momentum, he'd consider more stimulus (http://www.marketwatch.com/story/boes-vlieghe-uk-economy-has-lost-momentum-2016-05-20) for the U.K. economy even if the U.K. stays in the EU.

On June 23, Britons will vote on whether the U.K. should remain an EU member.

But for the week, the pound was up more than 1%, supported by recent polls showing a shift toward a "remain" vote in the Brexit referendum.

"Pollsters have got it wrong in the past, however, if they are on the mark this time round, we may continue to creep higher," said Tobias Davis, U.K. head of corporate treasury sales at Western Union Business Solutions, in a note.

Reports on Friday said attendees at an informal gathering of Group of Seven finance officials and academics in Sendai, Japan, expressed concerns about the impact of the coming Brexit vote on financial markets. Britons will vote in the in/out referendum on June 23.

(END) Dow Jones Newswires

May 20, 2016 12:37 ET (16:37 GMT)

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