UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Shire wins FDA treatment approval

U.K. stocks moved higher Thursday, aided by pound weakness before the Bank of England delivers its latest decision on interest rates, as the key London index continued to recover from a selloff prompted by trade tensions earlier in the week.

How markets are moving

The FTSE 100 index moved 0.4% higher at 7,657.48. The health care and consumer goods sectors topped the advancers, while the oil and gas group flipped slightly lower. The blue-chip benchmark on Wednesday gained 0.3% (http://www.marketwatch.com/story/ftse-100-leaps-1-as-commodity-shares-lift-index-off-6-week-low-2018-06-20).

The pound fell to $1.3138, from $1.3173 late Wednesday in New York. In the fixed-income market, the 10-year gilt yield added 1 basis point to reach 1.30%. Yields rise when prices fall.

What's driving markets

Stocks were still showing signs of recovery from their slide on Tuesday. Global equities were rattled by an escalation in the trade fight between the U.S. and China, the world's two largest economies.

Read:China can't match Trump in a tariff fight, but it does have other weapons (http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)

Attention is turning to the Bank of England, which will release its latest monetary policy decision at 12 p.m. London time, or 7 a.m. Eastern Time. The central bank is expected to hold its key interest rate at 0.5%. It has been at that level since November, when policy makers lifted the rate for the first time in a decade.

Ahead of the BOE statement, the pound is trading around lows last seen in November. Pound weakness can beef up revenue made overseas by multinational companies, which, in turn, can lift share prices.

Check out:Here's one way for pound bulls to prepare for the BOE policy meeting (http://www.marketwatch.com/story/heres-one-way-for-british-pound-bulls-to-prepare-for-the-bank-of-england-policy-meeting-2018-06-20)

Sterling got a modest lift Wednesday, after a key Brexit vote in parliament that was seen as a victory for U.K. Prime Minister Theresa May. Lawmakers in the House of Commons on Wednesday voted against a House of Lords amendment to the EU Withdrawal Bill that would have given parliament a "meaningful vote" -- or more say -- on the final divorce agreement.

What strategists are saying

-- "The modest rebound seen in equity markets ... shouldn't be taken as a sign that investors are getting used to the idea of a trade war. They are probably just an indication that escalation risks still remain some way away, despite the recent rhetoric between the U.S. and China," said Michael Hewson, chief market analyst at CMC Markets UK.

"The EU announced its retaliation measures to President Trump's tariffs earlier this month, which will start this Friday, and could well prompt a counter response from the U.S. in the coming days or weeks," Hewson said in a note.

-- "[H]ad it not been for a slowdown in the first quarter, [the Bank of England in May] may well have raised interest rates by 25 basis points, taking them above 0.5% for the first time since March 2009," said Craig Erlam, senior market analyst at Oanda, in a note.

"With the markets currently pricing in only a small chance -- roughly 40% -- of a hike in August, this may be where the potential for surprise lies. A strong signal that the central bank is going to push ahead with a hike at the next meeting -- either in an accompanying statement or with more policy makers voting for a hike -- could also be bullish for the pound," he added.

Stock movers

Among such multinationals, consumer products heavyweight Unilever PLC (ULVR.LN) climbed 1.4% and luxury goods maker Burberry Group PLC (BRBY.LN) picked up 0.7%. Drugmaker AstraZeneca PLC (AZN.LN) gained 0.8%.

Dixons Carphone PLC (DC.LN) shares rose 2.2%, even as the retailer said that fiscal 2018 pretax profit declined 28% amid challenges in the U.K. electrical business.

"All is not lost, however. As the group maintained some of its market leading positions, overall revenue edged up, there was a reduction in net debt and the Nordics region made a strong contribution," wrote Richard Hunter, head of markets at Interactive Investor.

Shire PLC (SHPG) added 2.4% after the U.S. Food and Drug Administration approved the drug maker's Cinryze hereditary angioedema treatment to be made available for children aged six years and older.

Shares of oil producers were mixed, but crude oil prices were down. Royal Dutch Shell PLC shares (RDSA.LN) (RDSA.LN) fell 0.6%, and BP PLC (BP.LN) (BP.LN) shares were fractionally higher.

Oil prices dropped as OPEC members closed in on a deal to increase production, according to media reports. Iran indicated it would accept a modest rise in output for the group, as OPEC oil ministers gathered for their summit in Vienna (http://www.marketwatch.com/story/what-time-is-the-opec-meeting-2018-06-19). U.S. crude prices fell by nearly 1% and Brent futures lost 1%, trading close to $74 a barrel.

(END) Dow Jones Newswires

June 21, 2018 04:41 ET (08:41 GMT)

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