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LONDON MARKETS : FTSE 100 Clings To Its Record As GKN Soars 26%

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01/12/2018 | 06:01 pm

By Carla Mozee and Sara Sjolin, MarketWatch

Pound soars to highest since Brexit vote

U.K. blue-chip stocks edged higher Friday, scoring a fresh record high, as GKN PLC surged after rebuffing a takeover move.

Industrial shares climbed, helping the London FTSE 100 log a sixth weekly win in a row.

How are markets moving?

The FTSE 100 index ended 0.2% higher at 7,778.64, taking out its previous record close of 7,762.94 set on Thursday.

For the week, the U.K. stock index bagged a 0.7% advance, rising for a sixth week in a row and logging its longest win streak since January last year.

The pound rallied to $1.3686, trading around its highest level against the U.S. dollar since the June 2016 Brexit referendum . Sterling traded at $1.3539 late Thursday in New York.

What's driving markets?

Stocks in London continued their steady march higher, boosted by higher global economic growth and expectations of better corporate earnings in the current results season. U.S. stocks were also heading for fresh records, aided by a sharp drop in the dollar . The greenback pulled back even as core inflation data beat forecasts, but still painted a dismal picture of inflation in the U.S.

In the U.K., mining shares were recovering after losing ground early in the session after the release of trade data from China, a major buyer of industrial and precious metals.

Chinese imports in December slowed to 4.5%, widely missing a FactSet estimate of 13%, which raised questions about domestic demand in the world's second-largest economy.

What are strategists saying?

"The FTSE 100 posted yet another all-time high, it appears the British index is following in the footsteps of the American markets. One notable difference the FTSE and the U.S. indexes is the London market is making relatively small strides higher, which suggest a canned excitement," said David Madden, analyst at CMC Market, in a note.

Which stocks are moving?

In the U.K., the industrial group was on the rise as GKN (>> GKN) shares soared 26% for its largest one-day percentage gain ever. The engineering group said Friday it has rejected an offer approach from Melrose Industries PLC (>> Melrose Industries). GKN said it plans to separate its aerospace and automotive businesses, as it named Anne Stevens as chief executive officer.

Melrose Industries share rose 5.8%.

Smiths Group PLC (>> Smiths Group) shares ended up 5.4% after the engineering group said it expects the net impact of U.S. tax reforms in the U.S. to be favorable over the medium term .

Mondi PLC shares (MND.JO) rose 1.1% after a ratings upgrade of the packaging and paper supplier to buy from hold at Investec.

"The stock is now trading on a 5% discount to peers vs its historical 5% premium," since the company's interim management statement in October. "We believe this was an over-reaction to short term issues facing Consumer Packaging, EM cost inflation and FX volatility," wrote analyst Gerard Moore in a research note.

In the mining group, Anglo American PLC (>> Anglo American) shares rose 0.4%, Antofagasta PLC (>> Antofagasta) moved up 0.6%, and Fresnillo PLC (>> Fresnillo) picked up 1.2%.

Home builders moved higher after Bovis Homes (>> Bovis Homes Group) said it foresees "significant improvement in profitability in 2018." Bovis shares rose 1.4% on the midcap FTSE 250 index. On the FTSE 100, Barratt Developments PLC (>> Barratt Developments) and Taylor Wimpey PLC (>> Taylor Wimpey) each put on 0.7%.

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