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Weak sterling boosts FTSE 100 after sharp slowdown in UK GDP

Published 27-04-2018, 02:25 pm
© Reuters.  Weak sterling boosts FTSE 100 after sharp slowdown in UK GDP
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(For a live blog on European stocks, type LIVE/ in an Eikon news window)

* FTSE 100 up 0.4 pct

* UK Q1 GDP growth slowest since 2012

* Sliding sterling boosts exporters

* Declining oil prices take toll on energy stocks

By Helen Reid

LONDON, April 27 (Reuters) - British shares climbed on Friday after weaker than expected GDP data triggered a slide in sterling, while Royal Bank of Scotland shares fell after its first-quarter results.

UK growth slowed much more sharply than expected in the first quarter, sending the pound to its lowest since March 9 against the dollar GBP= and raising questions about whether the Bank of England will raise rates next month.

Sterling's fall boosted multinational dollar-earners on the FTSE 100 .FTSE , helping it jump 0.4 percent to its highest since February 5, when a rolling global sell-off spread across markets.

UK-listed consumer staples stocks, which overwhelmingly make earnings in dollars and translate them back into sterling, all made gains as the pound fell.

Diageo DGE.L , Unilever ULVR.L , British American Tobacco BATS.L and Reckitt Benckiser RB.L rose 1 to 1.5 percent, the biggest boosts to the FTSE.

The index of major UK companies was on track to seal its fifth straight week of gains, its longest winning streak since January.

Results dominated trading with Royal Bank of Scotland down 1.7 percent and among the worst-performing European banks .SX7P .

RBS RBS.L shares fell despite the bank reporting a much stronger than expected pre-tax profit of 792 million pounds ($1.10 billion) in the first quarter, as costs from legal fines and restructuring fell. are still awaiting the outcome of the U.S. Department of Justice's investigation into alleged historical U.S. RMBS mis-selling, analysts said, also noting a deterioration in net promoter scores.

"In particular, the negative and deteriorating net promoter scores in NatWest branded business banking... look awful," wrote Jefferies analyst Joseph Dickerson.

Oil majors BP BP.L and Royal Dutch Shell (LON:RDSa) suffered share price falls, hampering the FTSE's gains as crude prices declined, having surged over the past week. revival in tech stocks helped the broader regional markets make gains, with Europe's tech sector .SX8P near a six-week high.

Shares in investment trust Scottish Mortgage SMT.L , which holds many of the heavyweight U.S. tech stocks, rose to the top of the FTSE after strong results from Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) sent the stocks soaring. sentiment on the UK has improved, with several big brokers raising their recommendation on the market in the past weeks. Investors still have their doubts, however.

"In the UK while we remain broadly positive there are a lot of headwinds as the Brexit negotiations continue. The market will swing on news on a daily basis," said Gary Waite, portfolio manager at Walker Crips.

"It's got the lowest growth rate among developed economies, so on a relative trade the marginal capital is better deployed in emerging markets, U.S. and Japanese equities," he added.

In other results-driven moves, Madame Tussauds owner Merlin Entertainments MERL.L gained 3.2 percent, rising to the top of the FTSE 250 after reporting trading in line with expectations.

The group said visits to its London attractions were however still suffering from the impact of last year's militant attacks in Britain. CPRC.L shares were up 11.3 percent on the small-cap index .FTSC after the struggling retailer's creditors and landlords approved its restructuring plan.

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