UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Traders wait for Theresa May's Brexit speech on Tuesday

U.K. stocks sought firm direction Monday while the pound was dragged sharply lower, as investors brace for the renewed prospect of British business losing access to the European Union's single market.

The FTSE 100 was up 3 points at 7,340, and has been seesawing between minor gains and losses. A win Monday would extend the index's run of gains to a 15th session, for its longest streak of advances ever. The index on Friday added 0.6% to 7,337.81, (http://www.marketwatch.com/story/ftse-100-continues-record-run-rising-for-14th-day-in-a-row-2017-01-13) a 12th consecutive all-time closing high. Last week, the London benchmark rose 1.8%.

Sterling slides: Much of Monday's focus was on the pound as the British currency slid by more than 1%, buying $1.2048 compared with $1.2189 late Friday in New York.

Sterling had hit a low of $1.1987 on Sunday after British media reported that U.K. Prime Minister Theresa May (http://www.marketwatch.com/story/uk-pound-drops-ahead-of-theresa-mays-brexit-speech-2017-01-15) will push for the country to leave the trading bloc's single market in exchange for greater control of immigration policy.

May has previously signaled the U.K. will move toward a so-called hard Brexit. She will outline her Brexit outlook in a speech scheduled for Tuesday (http://www.marketwatch.com/story/uk-pm-theresa-may-to-deliver-major-brexit-speech-tuesday-2017-01-12).

"It's looking more and more like a 'hard' Brexit is in the offing and markets are responding. The currency market is the most efficient and swiftest to price it in. However, the full effects of a hard Brexit are not yet completely discounted by the markets, and so we could have further to run, depending on what is said tomorrow," said Neil Wilson, senior market analyst at ETX Capital.

Wilson said in his note that the pound could hit $1.10 in the coming weeks.

Bank of England Governor Mark Carney is set to appear at the London School of Economics on Monday at 6:30 p.m (https://twitter.com/ScouseView/status/820962653766033408)., or 1:30 p.m. Eastern Time, and investors will watch for any comments he may make about the impact of Brexit on the British economy and businesses.

Individual movers: Pound weakness in recent months has pushed up shares of multinational companies, as the profit they make overseas is beefed up when it's converted into pounds. Among such multinationals, shares of consumer goods products makers Reckitt Benckiser Group PLC (RB.LN) and Unilever PLC (ULVR.LN) rose 1.1% and 0.8%, respectively. Luxury-goods maker Burberry Group PLC (BRBY.LN) was up 1.4%.

Burberry on Monday said Marco Gobbetti, currently CEO and chairman of Céline, will join Burberry on Jan. 27 and will become chief executive in July (http://www.marketwatch.com/story/marco-gobbetti-to-join-burberry-as-ceo-in-july-2017-01-16).

But the prospect of a hard Brexit was weighing on shares of some banks, which rely on passporting rules that allow them to more easily conduct business throughout the EU.

Barclays PLC (BCS) (BCS) fell 2% and HSBC Holdings PLC (HSBA.LN) (HSBA.LN) shed 0.1%. Separately, Royal Bank of Scotland Group (RBS.LN) (RBS.LN) lost 2.2% after Goldman Sachs downgraded the lender's rating to neutral from buy in a note discussing valuations in the European banking sector.

Mining shares were higher, with Randgold Resources Ltd. (RRS.LN) up 1.6% as gold prices hit an eight-week high. (http://www.marketwatch.com/story/gold-rises-to-8-week-high-as-traders-focus-on-trump-and-brexit-2017-01-16)

Trading volumes in the U.K. may be lighter on Monday as all key U.S. financial markets are closed to commemorate Martin Luther King Jr. Day (http://www.marketwatch.com/story/which-us-markets-are-closed-for-martin-luther-king-jr-day-2017-01-12).

(END) Dow Jones Newswires

January 16, 2017 07:35 ET (12:35 GMT)

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