By Sara Sjolin and Carla Mozee, MarketWatch
U.K. retail sales leap in November; Lonmin shares rally after
takeover
U.K. stocks declined on Thursday, as traders digested a defeat
for the government's Brexit bill. The setback for British Prime
Minister Theresa May is seen as potentially opening the way to a
softer U.K. exit from the European Union.
Investors were also looking ahead to the last Bank of England
monetary policy meeting and decision of the year. Ahead of that,
data showed a jump in monthly British retail sales.
What markets are doing: The FTSE 100 index fell 0.2% to
7,481.53, after closing marginally lower on Wednesday
(http://www.marketwatch.com/story/ftse-100-wavers-around-5-week-high-with-uk-jobs-update-on-deck-2017-12-13).
The benchmark was little changed after government figures on
November retail sales handily beat expectations.
The pound rose to $1.3449, up from $1.3419 late Wednesday in New
York. Against the euro, sterling strengthened to EUR1.1372,
compared with EUR1.1347 on Wednesday.
The 10-year gilt yield rose less than 1 basis point to 1.215%,
according to Tradeweb. Yields rise when prices fall.
What's driving markets: Brexit was a major focus for Thursday's
trade after May's government was defeated in a key parliamentary
vote on legislation for the U.K. divorce from the EU.
Late on Wednesday, the U.K.'s lower house voted to amend the
Brexit bill to give members of parliament the power to reject the
final divorce deal struck with Brussels. The government had warned
that the measure could jeopardize a smooth exit from the EU in
March 2019.
The vote -- which was an amendment to May's flagship Brexit bill
-- came after a rebellion of 11 members of her own Conservative
Party, and is seen as a potential route to a softer Brexit.
The pound slipped after the vote
(http://www.marketwatch.com/story/british-pound-slips-as-uk-parliament-votes-to-change-brexit-plan-2017-12-13)
on Wednesday, but bounced back early on Thursday.
The setback for the government comes just as EU leaders --
including May -- prepare to meet in Brussels on Thursday and Friday
for a summit where Brexit features high on the agenda. The group is
expected to give the green light for divorce talks to move onto the
second phase
(http://www.marketwatch.com/story/breakthrough-on-brexit-terms-opens-way-to-next-phase-of-talks-2017-12-08).
Central bank day arrives: Traders were also watching the BOE on
Thursday. The central bank will deliver its monetary policy
decision at 12 p.m. London time, or 7 a.m. Eastern Time. But after
raising rates for the first time in a decade in November, the BOE
is widely expected to stand pat this time.
Read: What analysts are looking for in Thursday's Bank of
England meeting
(http://www.marketwatch.com/story/what-analysts-are-looking-for-in-thursdays-bank-of-england-meeting-2017-12-12)
The European Central Bank is also seen keeping interest rates
and quantitative easing on hold when it announces its policy
decision at 12:45 p.m., or 7:45 a.m. Eastern Time. On Wednesday,
the Federal Reserve lifted interest rates for the third time this
year in a widely expected move.
Read:3 things to watch for at Thursday's ECB meeting
(http://www.marketwatch.com/story/3-things-to-watch-for-at-thursdays-ecb-meeting-2017-12-13)
What are strategists saying: "Since [the last BOE meeting], most
of the signals coming out of the British economy have been on the
positive side with economic activity picking up across all sectors,
wage growth moving higher and most importantly inflation still
ticking to the upside," said Konstantinos Anthis, researcher at ADS
Securities, in a note.
"These signals might have shaped expectations for a more bullish
BOE next year, with some investors still eyeing a rate hike sooner
than expected, but our view is that they might be disappointed
today," he added.
What's new in economics: The pound hit an intraday high of
$1.3467 after the Office for National Statistics said November
retail sales rose 1.1% month-over-month,
(http://www.marketwatch.com/story/black-friday-helps-boost-uk-retail-sales-2017-12-14)
and by 1.6% year-on-year. Those figures outstripped expectations of
0.4% and 0.3%, respectively, in a FactSet survey of analysts.
Customers picking up household appliances and other goods during
Black Friday events helped bolster sales, said the ONS.
The report wraps up a busy week of U.K. government economic
data. Earlier this week, the ONS said Britons' wages adjusted for
inflation
(http://www.marketwatch.com/story/uk-wages-fall-again-in-ongoing-consumer-squeeze-2017-12-13)
fell 0.4% in the three months to October, the eight consecutive
month of declines. Consumer price inflation hit a 3.1% annual rate
(http://www.marketwatch.com/story/uk-inflation-hits-almost-6-year-high-2017-12-12)
in November, the highest since March 2012.
Stock movers: Shares of retailers were lower even after the
strong U.K. sales report. Marks and Spencer shares (MKS.LN) were
down 0.1% and Next PLC (NXT.LN) was off 0.5% . Kingfisher PLC
(KGF.LN) and Associated British Foods PLC (ABF.LN) , which runs
fast-fashion company Primark, were each off 0.1%.
Shares of Lonmin PLC (LMI.LN) jumped 24% on the FTSE 250 after
South Africa's Sibanye-Stillwater (SGL.JO) said it'll buy the
UK.-listed struggling miner
(http://www.marketwatch.com/story/lonmin-agrees-to-takeover-by-sibanye-stillwater-2017-12-14)
for about GBP285 million ($382.83 million).
Fellow precious metals miner Randgold Resources Ltd. (RRS.LN)
(RRS.LN) climbed 1.7% on the FTSE 100 as gold prices climbed 0.7%
(http://www.marketwatch.com/story/gold-climbs-after-fed-sticks-to-3-rate-hikes-next-year-2017-12-14).
Capita PLC (CPI.LN) slid 14% after a trading update
(http://www.marketwatch.com/story/capita-sees-2017-in-line-bids-wont-add-to-profit-2017-12-14).
(END) Dow Jones Newswires
December 14, 2017 05:11 ET (10:11 GMT)
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