UKX FTSE 100 Index

By Mark DeCambre, MarketWatch

U.K. stocks set to end week sharply lower

The U.K.'s main stock index on Friday was trading little changed, with a sharp weekly decline for the benchmark in sight, as investors worried about the next phase of talks for Britons in protracted negotiations to exit from the European Union and fears that talks may result in a so-called hard Brexit, leaving the EU trade bloc without a defined trading arrangement.

How markets are performing

The FTSE 100 edged down less than 0.1% at 7,550.38, after advancing 0.8% to 7,556.38, and snapping a five-session slide in the prior session (http://www.marketwatch.com/story/uk-stocks-gain-in-rebound-from-previous-sessions-drop-2018-08-16).

The British blue-chip gauge is on track for a weekly decline of 1.3%, according to FactSet data.

The pound was buying $1.2715 slightly, edging slightly up from $1.2712 late Thursday in New York.

What's moving markets

London Mayor Sadiq Khan has reportedly told city officials to start making preparations for a no-deal Brexit, to determine if the city could deal with potential shortages of medicines and food, underscoring worries that continuing negotiations between the EU and Britain may prove unsuccessful.

Khan in an article in the Guardian (https://www.theguardian.com/politics/2018/aug/17/sadiq-khan-london-resilience-forum-must-prepare-no-deal-brexit-food-medicine-shortages) has accused the government of "dragging its feet" and leaving EU citizens in limbo.

Meanwhile, U.K. Foreign Secretary Jeremy Hunt, speaking in the Netherlands, told ITV News that the U.K. would "find a way to prosper and thrive" in the event of no deal, but said it would represent (https://www.telegraph.co.uk/politics/2018/08/16/jeremy-hunt-warns-no-deal-brexit-would-amistake-generations/)a "huge geo-strategic mistake."

Overall, volatility in the commodities sector, a major area for the British benchmark, amid worries about global trade, and a possible knock-on effect in emerging markets from Turkey's gyrations, have also been a key source of concern for investors over the past week.

Although those issues will likely continue to dictate sentiment, market participants have been slightly more upbeat about the prospect for the global market after it was reported (http://www.marketwatch.com/story/china-says-it-will-resume-trade-talks-with-us-2018-08-16) on Thursday that the Chinese Commerce Ministry would send a delegation to the U.S. later this month to resume trade talks, marking the first such meeting since July.

Moreover, investors also were bolstered by signs of health in the U.K. economy, with a report on retail sales for July showing a monthly increase of 3.5%, compared with the 2.6% that had been expected. Excluding fuel, they were up 3.7%, above the 3.0% consensus forecast.

Don't miss:A top London startup's CEO flags the biggest Brexit threat to his industry (http://www.marketwatch.com/story/a-top-london-startups-ceo-flags-the-biggest-brexit-threat-to-his-industry-2018-08-06)

What are strategists saying?

"Traders will be watching keenly for any headlines indicating the likelihood of the U.K. crashing out of Europe without a deal," said Jasper Lawler, head of research at London Capital Group.

Marios Hadjikyriacos, investment analyst at brokerage XM, in a research note on Friday said "the British pound barely advanced, largely unable to capitalize on strong U.K. retail sales figures. All eyes remain on the Brexit talks, where we may get some fresh comments today."

"Continued lack of progress could confirm the current pessimistic narrative and hence keep the currency at current low levels, or even trigger some further moderate losses. In contrast, any hints the negotiations are moving forward may come as a positive surprise, leading to an outsized relief bounce," he said

Stocks in focus

Shares of Royal Bank of Scotland Group PLC(RBS.LN) were trading slightly higher, up less than 0.1%, after being upgraded by HSBC bank analysts.

Kingfisher PLC shares(KGF.LN) were down 2.6%, leading losses on the British benchmark, a day after reporting second-quarter results (http://www.marketwatch.com/story/kingfisher-q2-sales-grew-after-harsh-weather-in-q2-2018-08-16) that failed to thrill investors.

Just Eat PLC's stock (JE.LN) led gainers on the FTSE 100, rising 0.8%.

(END) Dow Jones Newswires

August 17, 2018 05:56 ET (09:56 GMT)

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