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FTSE 100 rises to two-week high after pound hit by GDP revision

The pound was hit by a downward revision to UK GDP for the second quarter.


Manufacturing and construction figures

Manufacturing and construction figures

Manufacturing and construction figures

The FTSE 100 Index lifted to a two-week high on Friday on the back of a weaker pound, which dropped following a downward revision to UK growth figures.

London’s blue chip index ended the day up nearly 0.7% or 49.94 points at 7,372.76, its highest level since mid-September.

It made gains on the back of a softer pound, as multinational firms on the FTSE 100 tend to benefit when foreign currencies are stronger than the pound.


FTSE 100 chart

FTSE 100 chart

FTSE 100 chart

David Madden, a market analyst at CMC Markets UK, said: “The GBP/USD lost ground overnight and the weaker-than-expected UK GDP (gross domestic product) numbers added to the decline.

“In the second quarter, UK GDP was 1.5%, while economists were expecting a reading of 1.7%, and the previous reading was 2%.”

Sterling fell 0.3% versus the US dollar to trade at 1.339 and dropped 0.5% against the euro to 1.134 in the wake of the data.

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The revision added to the pound’s woes, having first been knocked by Bank of England Governor Mark Carney’s warnings on rising consumer debt.

Speaking to BBC Radio 4’s Today programme, Mr Carney said officials were worried that some lending by banks had been “a little frothy”, with a 10% rise in consumer debt.

He also gave fresh signals that a rise in interest rates is on the cards, but said any hike would happen in a gradual way.

However, Mr Madden said that the growth revisions issued on Friday “will take some of the wind out of the hawks’ sails”.

Across Europe, the French Cac 40 and German Dax rose 0.68% and 0.98%, respectively.

Brent crude prices fell 0.6% to $56.81 per barrel amid reports that oil production among Opec members actually rose in September, despite the group’s production freeze pact meant to tackle the global oil glut.

In UK stocks, troubled infrastructure giant Carillion plunged 13p to 51.25p after the firm revealed mammoth half-year losses of more than £1 billion and again warned over its performance.

The figure compares with an £84 million profit in the same period last year and includes an £845 million write-down relating to support services contracts and a goodwill impairment charge of £134 million linked to construction activities in the UK and Canada.


Carillion sign

Carillion sign

PA Wire/PA Images

Carillion sign

Carillion also made a fresh £200 million provision for support services contracts, and said that full-year results will be lower than current market expectations.

Purplebricks jumped 15.25p to 387.5p as the online estate agent said it expected to double half-year revenue in the UK to £36 million, after making strong progress over the last few months.

Beazley shares rose 19.8p to 479.5p despite issuing a profit warning.

The company said annual earnings will take a $150 million (£112 million) hit following a recent string of Atlantic hurricanes and earthquakes in Mexico which are expected to ramp up claims at the London-headquartered insurer.

The biggest risers on the FTSE 100 were ITV up 6p to 174.7p, Anglo American up 34.5p to 1,339.5p, Antofagasta up 20.5p to 949p, and Persimmon up 53p to 2,582p.

The biggest fallers on the FTSE 100 were Hargreaves Lansdown down 17p to 1,480p, Babcock International down 6p to 827.5p, Randgold Resources down 35p to 7,315p, and 3I Group down 3.5p to 913p.