MW: U.K. stocks higher, but weekly loss looks intact
Rolls-Royce, Barclays advance
By Carla Mozee, MarketWatch
LONDON (MarketWatch) — Stocks in London tilted higher Friday, with home builders lifted after upbeat analyst comments about the sector.
The FTSE 100 index UK:UKX +0.14% rose 0.2% to 6,746.88, but it was on track for a weekly decline of 1.2%.
Friday’s advance was headed up by a 3.4% rise in home builder Barratt Developments PLC UK:BDEV +3.89% and a 1.4% gain for Persimmon PLC UK:PSN +1.51% after UBS retained its positive view on the home-construction sector despite policy concerns.
Housing stocks bumped higher Thursday after the Bank of England outlined measures aimed at cooling the U.K.’s housing boom. The “recommendations to limit high loan-to-income lending and impose more stringent affordability stress-testing was a sensible, but relatively mild initial step to curb potential future excesses in the housing market,” said UBS analysts.
But an improving U.K. economy, historically low costs of mortgage financing and political support for new construction are still in the housing sector’s favor, they said.
Off the benchmark, housing developer Taylor Wimpey PLC UK:TW +2.55% rose 2.3%.
Also gaining was Rolls-Royce Holdings PLC UK:RR +1.43% . The shares picked up 1.5% after a Reuters report that Airbus Group FR:AIR +1.66% is near a decision to upgrade its A330 aircraft with engines made by Rolls-Royce.
Shares of Barclays PLC UK:BARC +0.79% were up 1.3% after dropping 6.5% Thursday to a 19-month low on U.S. legal problems. Reports said Barclays Chief Executive Antony Jenkins said in a staff memo Thursday that the bank will conduct an internal probe, following accusations of dark-pool fraud in a lawsuit filed by the New York Attorney General.
U.K. stocks on Friday held to gains after the Office of National Statistics kept its estimate of first-quarter growth in gross domestic product at 0.8%, meeting expectations for the quarter-over-quarter figure. Growth on an annualized basis was reduced to 3% from 3.1%.
The pound GBPUSD -0.02% briefly dipped following the report, but stayed around the $1.70 level. It was buying $1.702 per dollar, compared with $1.6983 late Wednesday.
On Friday, Bank of England Governor Mark Carney told the BBC that returning to “old normal” level of interest rates of 5% appeared unlikely in the medium term, as economic growth still faces challenges including higher levels of household debt. He suggested that rates would be around 2.5% by 2017.
