FTSE rises as sterling retreats, set for monthly loss

LONDON - Britain’s FTSE edged up on Friday as sterling weakened on poor economic data but was set, unlike continental exchanges, for a monthly loss as the pound’s recovery in September hit its dollar-earning constituents.

Sterling fell half a percent after data showed GDP growth for the second quarter was revised downwards and the current account deficit blew past expectations, raising doubts that the Bank of England will follow its hawkish rhetoric this month by actually raising rates.

The British blue chip index .FTSE was up 0.6 percent in early trading, with miners contributing most with rises across all sectors.

Glencore (GLEN.L), Rio Tinto (RIO.L), BHP Billiton (BLT.L) and Anglo American (AAL.L) were up between 1.1 and 1.3 percent.

Oil majors were in positive territory as oil prices are giving a boost to the sector, with Royal Dutch Shell (RDSa.L) and BP (BP.L) both up 0.4 percent.

Both Brent and U.S. crude are set to chalk up another weekly gain as investors bet that efforts to cut a global glut are working and that the demand outlook is improving.

Aviva (AV.L) was up 1.3 percent after it agreed to sell its Italian joint venture to Banco BPM for 265 million euros in cash.

Insurer Beazley BEZG.L jumped 3.9 percent after it reckoned its losses from hurricanes Harvey, Irma and Maria and a series of earthquakes in Mexico would reduce its 2017 earnings by about $150 million, less than analysts had earlier expected.

ITV (ITV.L) posted the best performance of the index with a 3.1 percent rise after Barclays rose its rating for the British commercial broadcaster.

British construction and support services group Carillion (CLLN.L) plunged 11 percent after it warned it expected full-year results to be lower than market forecasts, as it booked a further provision relating to services contracts.

Overall, however, the session’s gains will not offset a monthly downward trend of the FTSE 100.

“The rebound in sterling has acted as a bit of a drag on the UK benchmark”, said Michael Hewson, of CMC Markets, noting the symmetry with the pound, which is on track for its best month against the dollar since 2013.

After hitting record highs in May thanks to the weakness in the pound that followed Britain’s decision to leave the European Union, the FTSE has started to lose ground as the Bank of England has turned more hawkish.

Apart from the immediate currency translation effect, analysts also point out that investor sentiment regarding the UK market has soured. Societe Generale, for instance has cut its UK position in its multi-asset portfolio to zero.