LONDON MARKETS: U.K. Stocks Recover Slightly From Slide; Pound Resilient Before Brexit Trigger

By Victor Reklaitis, MarketWatch

Show of strength by U.S. stock markets helps sentiment

U.K. stocks edged higher Tuesday, helped by U.S. markets ending their session well above their worst levels, though traders appeared to avoid big bets ahead of a key Brexit step.

The FTSE 100 index rallied by 0.3% to 7,317.30, recovering somewhat from Monday's 0.6% fall, which left the benchmark at its lowest close in nearly a month.

That fall came amid a global stock selloff, which was blamed on worries that U.S. President Donald Trump might struggle to implement business-friendly measures after a Republican overhaul of the health care system flopped. But the S&P 500 on Monday closed down by only 2 points, or 0.1%, after being lower by as many as 22 points (http://www.marketwatch.com/story/dow-futures-slide-more-than-150-points-as-doubts-over-trumps-agenda-build-2017-03-27).

It was "a display of resilience from the U.S. indices, which clawed back their opening losses through the session to close virtually flat," said Ian Williams, a Peel Hunt strategist, in a note.

Brexit buildup: The pound was trading at $1.2572 Tuesday, up slightly from $1.2565 late Monday in New York, ahead of a much anticipated step in the U.K.'s withdrawal from the European Union. On Wednesday, Prime Minister Theresa May is expected to invoke Article 50 (http://www.marketwatch.com/story/uk-prime-minister-to-trigger-start-of-brexit-process-on-march-29-2017-03-20) to start the Brexit process.

The triggering of Article 50 "has been widely announced to the market, but with the Brexit honeymoon period for U.K. economic data already seemingly over, could there be some resulting downside pressure for the pound?" asked Tony Cross, market analyst for TopTradr, in a note.

"As it stands for now, [sterling] remains resilient, but with a relatively quiet economic calendar in the next 24 hours and nothing of note due out of the U.K., the excuse to take money off the table ahead of any potential uncertainty could well see the stiff upper lip move to a bloodied nose," he said.

Individual movers: Tesco PLC (TSCO.LN) shares slipped 0.3% after the supermarket company agreed to pay a fine of GBP129 million (http://www.marketwatch.com/story/tesco-fined-129-million-for-overstating-profit-view-2017-03-28) ($162 million) for overstating expected profits in 2014. Under a related but separate deal, Tesco will pay certain investors in stocks and bonds compensation.

(END) Dow Jones Newswires

March 28, 2017 04:12 ET (08:12 GMT)

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