LONDON MARKETS: Pound's March Higher Pulls Exporter-heavy FTSE 100 Lower

By Carla Mozee, MarketWatch

Slides in price of oil and metals also pull London stocks lower

U.K. stocks sagged Tuesday, with pound strength and weakness in commodity prices weighing on blue chips.

The U.K's FTSE 100 shed 0.3% to 6,729.79, with only the financial and utility sectors showing gains. The index on Monday closed up 0.2% (http://www.marketwatch.com/story/ftse-100-rises-as-bank-shares-recover-from-downbeat-start-2016-12-05), recovering after intraday losses.

At the same time, the pound was buying $1.2749, up from $1.2727 late Monday in New York. Sterling last week rose nearly 2% against the greenback.

While the dollar is off its worst levels against a basket of currencies, the pound is holding around two-month highs, which "represents a drag on the foreign profits of FTSE stocks," said Accendo Markets in a note.

Among multinationals, Rolls-Royce Holdings PLC (RR.LN) fell 2%, paper and packaging company Mondi PLC (MND.JO) lost 0.8% and Hikma Pharmaceuticals PLC (HIK.LN) gave up 0.9%.

Commodity pain: Meanwhile, commodity shares were losing ground as prices for oil and most metals fell, including a 1% drop in copper .

Shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) moved down 0.9% and 0.4%, respectively. Miner Anglo American PLC (AAL.LN) gave up 2.2% and Glencore PLC (GLEN.LN) was off 1.5%.

Other movers: At the bottom of the index was Barratt Developments (BDEV.LN) . Shares fell 2.7% after the home builder's rating was cut to sell at Liberum, which said "its margins and landbank make it less attractive," than its peers.

But gains in bank shares Tuesday were led by HSBC Holdings PLC (HSBA.LN) ,. which climbed 2.6% after the Asia-focused lender was upgraded to an overweight rating from underweight by Morgan Stanley. The upgrade comes as interest rates in Hong Kong have risen alongside an increase in the U.S. dollar, and a steeper yield curve can aid bank profitability, noted Barron's Blog.

Ashtead Group PLC (AHT.LN) pushed up 1.2% after the equipment rental company upgraded its fiscal 2017 expectations (http://www.marketwatch.com/story/ashtead-sees-yearly-results-ahead-of-expectations-2016-12-06) after reporting second-quarter earnings growth.

(END) Dow Jones Newswires

December 06, 2016 04:22 ET (09:22 GMT)

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