UKX FTSE 100 Index

By Sara Sjolin and Victor Reklaitis, MarketWatch

London Stock Exchange Group, 3i Group among the day's advancers

U.K. stocks ended in positive territory Wednesday, helped by the pound's drop, as Britain triggered Article 50 and officially kicked off its exit from the European Union, known as Brexit.

The FTSE 100 index rose 0.4% to end at 7,373.72, while the pound (http://www.marketwatch.com/story/british-pound-under-pressure-ahead-of-brexit-trigger-2017-03-29) changed hands at $1.2411, down from $1.2456 late Tuesday.

The moves came U.K. Prime Minister Theresa May's letter invoking the Treaty of Lisbon was delivered to Donald Tusk (http://www.marketwatch.com/story/eu-receives-uk-letter-officially-kicking-off-brexit-talks-2017-03-29), president of the European Council.

"Although the pound initially rallied, it has since backed off its highs," said Kathleen Brooks, research director at City Index, in a note. "Essentially both sides were polite to each other, which helped to keep volatility suppressed and price action fairly muted."

Read:How to trade the pound as Theresa May pulls the Brexit trigger (http://www.marketwatch.com/story/avoid-being-short-with-the-crowd-how-to-trade-the-pound-as-may-pulls-brexit-trigger-2017-03-28)

And see:'We already miss you,' EU president Tusk tells U.K. after Brexit letter (http://www.marketwatch.com/story/we-already-miss-you-eu-president-tusk-tells-uk-after-brexit-letter-2017-03-29)

"The FTSE 100 reached its lows of the day as Brexit talks were formally kicked off, however, after falling to a low of 7,313, it has managed to claw back some losses," Brooks added. "We continue to believe that UK stocks could be vulnerable during this next phase of the Brexit process."

The big question now is whether Brexit has been fully factored in, according to Neil Wilson, senior market analyst at ETX Capital.

"A truly hard Brexit has not been priced into sterling. We could see it move lower still if negotiations take a sour turn -- $1.10 is feasible," Wilson said in a note.

Read:Here's what happens now that the U.K. has triggered Article 50 (http://www.marketwatch.com/story/brexit-heres-what-happens-now-that-the-uk-has-triggered-article-50-2017-03-29)

Also read:Three ways today's triggering of Brexit will change Britain and Europe (http://www.marketwatch.com/story/three-ways-article-50-will-change-britain-and-europe-2017-03-29)

A "hard Brexit" refers to a scenario in which the U.K. sacrifices trade deals with the EU in return for full control of its borders. Balancing between this and less drastic changes will be a challenge for the British prime minister, Wilson said.

"It's a fine line for May to tread, as she's in hock to the hard Brexit camp in the Conservatives. She also doesn't want to be seen to cave into demands from Scottish nationalists for a softer exit," he said.

"All this points to sustained risk for sterling--if an acceptable deal isn't done in time, then the U.K. crashes out of the bloc on WTO terms and all the tariffs that entails," he added.

Scottish First Minister Nicola Sturgeon has called for the U.K. to remain in the EU's single market and has criticized May for her lack of compromise on Brexit. On Tuesday, Scotland's parliament voted in favor of pursuing a second referendum on independence (http://www.marketwatch.com/story/uk-government-snubs-scottish-parliament-vote-to-hold-new-independence-referendum-2017-03-28), though May has signaled a ballot won't take place before the Brexit is settled.

Stock movers: Shares of London Stock Exchange Group PLC (LSE.LN) finished 2.7% higher after the European Union's antitrust dog blocked the planned $28 billion merger (http://www.marketwatch.com/story/eu-blocks-lse-deutsche-borse-merger-2017-03-29-54851952) with Deutsche Börse AG .

Shares of 3i Group PLC (III.LN) jumped 5.7% after Morgan Stanley lifted the venture capital company to overweight from equal weight.

Shares of BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) climbed 2.7% after the mining giant said it's considering a new iron-ore investment (http://www.marketwatch.com/story/bhp-billiton-looks-at-aussie-iron-ore-investment-2017-03-29) in Australia.

In other mining news, Glencore PLC (GLEN.LN) (GLEN.LN) tacked on 0.5% after saying its Australian coal mines weren't damaged by Tropical Cyclone Debbie and that suspended work at mines should restart soon.

Shares of TUI AG dropped 1.1% after the travel operator reaffirmed its fiscal 2017 guidance (http://www.marketwatch.com/story/tui-reaffirms-growth-target-as-bookings-meet-views-2017-03-29), but said macroeconomic and geopolitical challenges had affected certain destinations.

Economic news: Data from the Bank of England showed consumer borrowing continued to rise rapidly in February (http://www.marketwatch.com/story/uk-consumer-borrowing-continues-its-rapid-rise-2017-03-29), highlighting that households are taking on more debt to finance spending amid quickening inflation.

(END) Dow Jones Newswires

March 29, 2017 12:20 ET (16:20 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.