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LONDON MARKETS : FTSE 100 Clings Onto Its Record As GKN Soars

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01/12/2018 | 11:00am CEST

By Carla Mozee, MarketWatch

Blue chips set for 6th weekly win as miners shake off China import data

U.K. blue-chip stocks edged higher Friday, sticking close to a record high, as GKN PLC surged after rebuffing a takeover move.

Industrial shares climbed, helping put the London FTSE 100 on track to log a sixth weekly win in a row in the first week of 2018 trading.

How are markets moving?

The FTSE 100 index was up 0.1% at 7,767.98, with industrial and health care shares topping advancers. But tech, financial and commodity-related shares fell.

On Thursday, the London benchmark gained 0.2% to hit a record closing high of 7,762.94, taking out the record finish set on Wednesday.

For the week, the U.K. stock index was on track to rise 0.6%, which would mark the longest win streak since October.

The pound bought $1.3551, up from $1.3539 late Thursday in New York.

What's driving markets?

Stocks in London steadied but still headed for another weekly rise, continuing the recent rally. Expectations of higher economic growth and better corporate earnings have driven U.S. stocks higher and helped lift other markets worldwide.

The release of U.S. inflation data and earnings releases from big U.S. banks later Friday may test the positive investing mood.

In the U.K., mining shares were recovering after losing ground early in the session after the release of trade data from China, a major buyer of industrial and precious metals.

Chinese imports in December slowed to 4.5%, widely missing a FactSet estimate of 13%, which raised questions about domestic demand in the world's second-largest economy.

"A key driver was a sharp drop in inbound shipments of industrial commodities. In particular, growth in oil and iron ore imports now appears to be trending down," said Julian Evans-Pritchard, senior China economist at Capital Economics, in a note.

What are strategists saying?

"European equity markets are higher in early trade, following on from new U.S. highs and the 14th straight day of gains in Hong Kong. Recent market highs have been based on expectations of higher global growth and increased corporate earnings, so the start of the U.S. earnings season today is a major market event," said Rebecca O'Keeffe, head of investment at Interactive Investor, in a note.

"Investors will be hoping that both top-line growth and high margins can lead to substantial earnings growth and justify current equity valuations," she said.

Which stocks are moving?

In the U.K., the industrial group was on the rise as GKN (>> GKN) shares soared 25%. The engineering group said Friday it has rejected an offer approach from Melrose Industries PLC (>> Melrose Industries). GKN said it plans to separate its aerospace and automotive businesses, as it named Anne Stevens as chief executive officer.

Smiths Group PLC (>> Smiths Group) shares were up 3.1% after the engineering group said it expects the net impact of U.S. tax reforms in the U.S. to be favorable over the medium term .

In the mining group, Anglo American PLC (>> Anglo American) shares were down 0.5%, and Rio Tinto PLC (>> Rio Tinto plc) (>> Rio Tinto plc) (>> Rio Tinto plc) fell 0.5%. But Antofagasta PLC (>> Antofagasta) moved up 1%, and Fresnillo PLC (>> Fresnillo) picked up 0.9%.

Home builders moved higher after Bovis Homes (>> Bovis Homes Group) said it foresees "significant improvement in profitability in 2018." Bovis shares rose 2.9% on the mid-cap FTSE 250 index. On the FTSE 100, Barratt Developments PLC (>> Barratt Developments) added 1.2%, while Taylor Wimpey PLC (>> Taylor Wimpey) put on 1.1% and Persimmon PLC (>> Persimmon) tacked on 1.3%.

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