London’s FTSE closes at record level

Stock market steadies against stronger sterling

LONDON (Reuters) – British shares edged higher on Friday, closing at a record level but with a stronger sterling capping gains.

The FTSE 100 index ended 0.1% higher and posted a small gain for the week.

A rising pound, however, added pressure on blue chips after jumping on Thursday following an unexpected vote for a rise in interest rates from outgoing Bank of England policy-maker Kristin Forbes.

“Mixed appetite in commodities added to the stronger pound could keep the appetite limited,” said Ipek Ozkardeskaya, analyst at LCG Markets.

Royal Bank of Scotland was among top blue-chip gainers, up 1.4% after Natixis upgraded its view on the bank, saying the investment thesis was reaching a turning point.

“The time is near when the long-standing strengths of the core bank will outweigh the material drag of legacy items,” the bank said.

The bigger moves in British stocks, however, were in mid-caps and small-caps.

Tullow Oil dropped almost 15%, after it announced a £607 million share sale to cut its $4.8 billion debt burden.

The rights issue was offered at a 45.2% discount to yesterday’s closing price.

“We believe today’s announcement provides sufficient liquidity to get through 2018, but Tullow may still need to refinance its $3.3b. reserve-base loan and/or farm-down Kenya to avoid the risk of value leakage through project deferrals in 2019 and beyond,” said UBS analysts.

London-focused housebuilder Berkeley rose to its highest since the Brexit vote, up 6.1% after it forecast full-year profits at the top end of market estimates despite demand falling in the capital.

“Today’s statement is a clear signal of the disconnect between the new build and second hand market,” said Jefferies analysts. “While London-based estate agents are feeling the cold, Berkeley Group is warming itself in the spring sunshine.”

Valve-maker Weir Group was up 3.3% after Barclays upgraded the stock to “overweight,” forecasting double-digit order growth over 2017-18.

The small-cap index outperformed other major European share indexes, up 0.4% as biotech company Circassia soared.

Circassia gained as much as 23% after it signed a deal with AstraZeneca to develop and commercialize drugs Tudorza and Duaklir, licensed by Spain’s Almirall, in the US It ended the session up 5.4%.

The firm lost more than half its market value in June 2016 when its experimental cat allergy treatment failed a late-stage trial.

On Friday, the Bank of Israel set its representative rate for the British pound at NIS 4.4972.