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By Alistair Smout and Atul Prakash
LONDON Oct 19 Britain's top share index
finished higher on Wednesday, with energy stocks tracking a
sharp rally in crude oil prices and banks gaining momentum after
U.S. bank Morgan Stanley reported better-than-expected profits.
The UK oil and gas index rose 0.9 percent, the
top sectoral gainer, as oil prices jumped more than 2 percent
after the U.S. government reported a surprising drop in domestic
crude stockpiles. Shares in BP, Tullow Oil and
Royal Dutch Shell rose 1.2 to 2.3 percent.
Financial stocks were also in demand after Morgan Stanley's
results were boosted by a surge in bond trading. The UK
banking index was up nearly 1 percent, helped by a
0.9 to 1.6 percent rise in shares of Barclays, Lloyds
Banking Group and Royal Bank of Scotland.
"The FTSE 100 closed above the 7,000 mark and may well set
new records in the days ahead on the back of positive momentum
and some stronger earnings reports," Securequity senior trader
Jawaid Afsar said.
"Earnings from Morgan Stanley helped the banking sector,
while a spike in crude oil prices supported heavyweight oil
majors like BP and Shell. The positive correlation between
commodity prices and energy and mining shares are here to stay."
The FTSE 100 ended 0.3 percent higher at 7,021.92
points, not far from its record high of 7,129.83 in the previous
week. The FTSE mid-cap 250 index rose 0.3 percent.
Among major gainers, Burberry rebounded from recent
falls to end 4.2 percent higher. It fell 7.2 percent on Tuesday
after poorly-received earnings, its biggest one-day drop for a
year, but brokers said the move was more than justified. Both
Berenberg and Barclays raised their target price on the stock.
On the downside, Travis Perkins fell 4.4 percent
after Britain's biggest supplier of building materials warned on
full-year profit, blaming a poor performance in its plumbing and
The stock is down about 27 percent since Britain voted to
leave the European Union in June, making it the fourth worst UK
blue-chip performer in the four months since the referendum.
Some analysts said its gloomy update will confirm worries that
the British economy may be set for a slowdown.
"People are taking fright as to whether there might be a
broader readthrough to the UK economy," said Russ Mould,
investment director at AJ Bell.
"The disappointing statement today will bring the risk of a
UK economic slowdown back on the horizon, at a time when the
market is obviously worried about the inflation genie coming out
of the bottle as well."
Fears of higher inflation have started to hit British
consumer sentiment for the first time since June's vote to leave
the European Union sent the value of sterling tumbling, a survey
of households showed on Wednesday.
Mid-cap Laird sank 49 percent after the supplier to
smartphone makers issued a profit warning.