LONDON MARKETS: Unilever Helps Lift FTSE 100 To Highest Finish In A Month

By Carla Mozee, MarketWatch

Retail sales rise; sterling loses grip on $1.30; easyJet shares suffer

U.K. stocks bounced to their highest close in a month Thursday, with Ben & Jerry's ice cream maker Unilever PLC gaining after its earnings report, one of a stream of financial releases.

Stocks remained higher after the release of U.K. retail sales data, and weakness in the British pound also aided British blue-chips.

The FTSE 100 index climbed 0.8% to 7,487.87. That's the best finish since June 19, and the largest percentage rise since July 12, FactSet data showed. All but the basic materials sector advanced.

In the oil and gas group, BP PLC shares (BP.LN) popped up 1% after The Wall Street Journal reported that the oil producer has approached potential buyers of its oil-and-gas production assets in the North Sea (http://www.marketwatch.com/story/bp-approaches-possible-buyers-of-north-sea-assets-2017-07-20).

The FTSE 100 outperformed European stocks (), which fell after European Central Bank President Mario Draghi said policy makers will discuss its bond-buying program in the "autumn". At the same time, investors sent the euro flying to its highest in more than a year, brushing past the dovish tone about monetary stimulus that Draghi aimed to strike at his press conference.

Investors have used proceeds from sales in bonds to the ECB to buy other assets, including U.K. equities.

Read:Nobody told the euro that Mario Draghi was dovish (http://www.marketwatch.com/story/nobody-told-the-euro-that-mario-draghi-was-dovish-2017-07-20)

Earnings season: More corporate results were issued Thursday. Unilever shares (ULVR.LN) advanced 1.7% after the maker of Lipton tea and Alberto Balsam hair care products said first-half net profit rose to 3.11 billion euros ($3.58 billion) and that margins should be better than previously expected over the full year. (http://www.marketwatch.com/story/unilever-posts-profit-gain-lifts-margin-guidance-2017-07-20)

But shares of EasyJet PLC (EZJ.LN) were dragged down 5.9% even as the budget airline said unit revenue turned positive (http://www.marketwatch.com/story/easyjet-quarterly-unit-revenue-turns-positive-2017-07-20) in the third quarter after a period of sharp declines.

Despite an improvement in the third quarter, "the group still expects revenue per seat to decline by 2% across the second half as a whole, and that suggests that the key summer period has been seeing some significant discounting," wrote Laith Khalaf, senior analyst at Hargreaves Lansdown.

Anglo American PLC (AAL.LN) retreated from earlier gains and closed down 2.9%. The miner raised this year's production guidance for its Kumba Iron Ore business in South Africa, and posted an 8% increase in copper equivalent production (http://www.marketwatch.com/story/anglo-american-ups-kumba-iron-ore-output-guidance-2017-07-20) in the second quarter.

Off the main benchmark, shares of Sports Direct International PLC (SPD.LN) rallied 11%, pushing past the sports-equipment retailer's report that a slide in the pound drove down fiscal 2017 pretax profit. (http://www.marketwatch.com/story/sports-direct-profit-hit-by-brexit-battered-pound-2017-07-20)

(http://www.marketwatch.com/story/sports-direct-profit-hit-by-brexit-battered-pound-2017-07-20)Moneysupermarket.com Group PLC shares (MONY.LN) fell 2.5%, but recovered from deeper losses, as the price comparison website warned adjusted operating profit will be at the lower end of market consensus for the full year. (http://www.marketwatch.com/story/moneysupermarketcom-warns-on-yearly-profit-2017-07-20)

Sterling: The pound had pared its loss against the dollar after the Office for National Statistics said U.K. retail sales rose 2.9% in June year-over-year, (http://www.marketwatch.com/story/uk-retail-sales-rebounded-in-second-quarter-2017-07-20-44855431) above a FactSet estimate of 2.6%. Sales rose by 1.5% for the second quarter.

But the pound eventually turned lower, falling to $1.2964, compared with an intraday high of $1.3033 and with late Wednesday's settlement of $1.3025.

"Sterling fell as it appeared there has been no real progress on Brexit talks, despite stronger retail sales figures delivering a short-term boost to sentiment," ETX Capital's senior market analyst Neil Wilson wrote.

Read:EU, U.K. clash over divorce bill (https://www.wsj.com/articles/eus-barnier-seeks-clarity-from-u-k-over-brexit-divorce-bill-1500550926)

"Where now? There is so much negativity around at the moment that any rallies in sterling are likely to come under pressure, which makes heading north of $1.30 hard going," said Wilson. "There is no compelling reason to buy the pound right now, especially since that weak inflation read killed of an imminent rate increase by the Bank of England, so any rally looks a sell."

A weaker pound can help push up shares of export-focused multinational companies that pull in revenue from overseas, and that, in turn, can bolster the FTSE 100 index.

Check out:Why there is a 'massive' opportunity in British leisure stocks (http://www.marketwatch.com/story/why-there-is-a-massive-opportunity-in-british-leisure-stocks-2017-07-19)

(END) Dow Jones Newswires

July 20, 2017 13:05 ET (17:05 GMT)

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