Weak pound boosts FTSE 100 as Brexit talks continue in Brussels
London’s top index closed 0.69% higher.
The FTSE 100 was lifted by the weaker pound on Tuesday following reports that the Government doubts that there will be a breakthrough in Brexit talks between Attorney General Geoffrey Cox and the European Union’s chief negotiator Michel Barnier.
London’s blue-chip index closed 49.04 points, or 0.69%, higher at 7,183.43 while Germany’s DAX rose 0.22% and France’s CAC grew 0.14%.
Sterling was down 0.29% against the US dollar at 1.313 but rose 0.07% versus the euro at 1.162 at the London market close.
The pound was largely unmoved earlier in the day by data which revealed that output in Britain’s dominant services sector increased marginally in February as hiring declined at its fastest pace in seven years.
Instead, gloomy Brexit headlines were responsible for sending sterling below 1.31 against the greenback for the first time in a week, according to Fiona Cincotta, senior market analyst at City Index.
She said: “Expectations are low for an imminent breakthrough as UK Attorney General Geoffrey Cox goes to Brussels to try to secure concessions. This is reflected in the falling price of the pound.
“We expect the pound to remain under pressure across the week as investors start positioning ahead of next week’s Brexit voting bonanza.”
In corporate news, outsourcing giant Interserve rejected a revised restructuring package tabled by one of its key shareholders, renewing fears that the firm could collapse.
Interserve said a proposal received from New York hedge fund Coltrane, which owns more than 27% of the firm, would risk the future of the company together with “its employees, pensioners, customers and suppliers”.
Interserve shares closed up by 2.1p to 17.9p.
The chief executive of British Airways owner IAG hit out at the Government’s lack of Brexit progress, branding it “shocking” that the country still has no clarity on the future.
Willie Walsh also said in the company’s annual report that all the “credible forecasts” show that Brexit will have a negative economic impact, adding that IAG must remain “very agile” to navigate the immediate risks.
IAG shares rose by 1p to 575p.
Shares in Debenhams tumbled after the troubled retailer warned over profits as sales continue to come under pressure, with the firm also locked in restructuring talks with its lenders.
The department store chain said in an unscheduled update that its January statement claiming it was on track to deliver profits in line with market expectations is “no longer valid”.
Debenhams shares fell 0.09p to 3.10p.
British American Tobacco is to take a £436 million hit after it lost an appeal in a long-running court case brought by disgruntled smokers.
Last week, the Quebec Court of Appeal dismissed an appeal by BAT, Philip Morris and Japan Tobacco, which had challenged a judgment ordering them to shell out 15.6 billion Canadian dollars (£8.8 billion) as part of a class action lawsuit.
BAT shares were up 29p to 2,900.5p.
Brent crude, the international benchmark, traded up 0.11% at 65.64 US dollars (£49.96).
The biggest risers on the FTSE 100 were GVC Holdings up 46p to 697p, NMC Health up 82p to 2,938p, Fresnillo up 17.6p to 816.6p, and Hikma Pharmaceuticals up 34.5p to 1,738p.
The biggest fallers on the FTSE 100 were Intertek down 192p to 4,996p, Royal Bank of Scotland down 6.4p to 259.9p, ITV down 3.25p to 134.25p, and Marks & Spencer down 6.3p to 276.8p.