FTSE 100 close to two-month high as pound falls

European shares rose on Friday, with London listed mining stocks driving gains due to a weaker pound, while hopes of a quick resolution to the U.S.-China trade war offset worries about slowing economic growth.

The FTSE 100, packed with companies whose revenues tend to rise when Britain's pound falls, jumped 0.8% to a near two-month high, after the currency took a hit from the Bank of England's first clear signal it was eyeing an interest rate cut.

The pan-European STOXX 600 index rose 0.3% with the basic resources sector gaining 1.6%, the most among the major European subsectors. Multiple profit warnings from European companies this week have fueled fears of recession and any gains have tended to come in sectors commonly perceived as defensives such as healthcare, real-estate and utilities.

Oil prices and a gauge of global equity markets fell on Friday on media reports that the administration of President Donald Trump may limit U.S. portfolio investments into China, a move that would mark an escalation of U.S.Sino trade tensions.

The delisting of Chinese companies from U.S. stock exchanges was part of a broad effort to limit U.S. investment in Chinese companies, two sources briefed on the matter said. The United States and China are prepping for another round of high-level trade talks scheduled for the 10 and 11 October in Washington, aimed at resolving their near 15-month long trade dispute.

MSCI’s world equity index, which tracks shares in 47 countries, had rebounded earlier in the session on optimism the U.S.-China trade row might be easing. Markets largely brushed off concerns about impeachment moves against Trump.

Oil prices fell and posted a weekly loss on faster-than-expected recovery in Saudi output, while investors also worried about global crude demand amid slowing Chinese economic growth.

During a volatile session, Brent crude futures fell 83 cents to settle at $61.91 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 50 cents to settle at $55.91 a barrel.