January 24, 2018 / 10:42 AM / a year ago

Britain's FTSE dips as jobs data boosts sterling

* Sterling at highest level since Brexit vote

* Employment data posts surprise surge

* Sage Q1 disappoints

By Julien Ponthus

LONDON, Jan 24 (Reuters) - Britain’s top share index fell on Wednesday as sterling was pushed to a new post-Brexit-vote high by data that showed the number of people in work had surged unexpectedly.

At 0950 GMT, the FTSE was down 0.5 percent, slightly underperforming other European markets as the pound rose 0.7 percent to about $1.41, a level not seen since June 2016.

The UK jobs data boosted gilt yields, dimming the appeal of consumer staples stocks that are a favourite among income investors, such as BAT and Reckitt Benckiser, which contributed the most to the FTSE’s fall.

The slow recovery of sterling since the June 2016 Brexit vote has given an accounting boost to UK blue chips with revenue in dollars. A weak pound typically supports the FTSE while its rise usually puts a drag on the index.

“It is becoming increasingly difficult for the BoE to justify its ultra-accommodative policy stance”, said Kallum Pickering, a senior economist at Berenberg, who expects, given the buoyant employment data, two interest rates hikes in 2018, which may provide yet further support to the pound.

Miners were the only group gaining ground, with Fresnillo up 2.7 percent after it posted record annual silver production. Anglo American and Rangold Resources were up 2.6 percent and 1.5 percent respectively.

Chilean copper producer Antofagasta on the other hand fell 1.7 percent after it reported lower fourth-quarter production and said it expected its 2018 costs to be higher.

Software company Sage Group was by far the worst performing stock after it published first-quarter results.

“Q1 is slightly disappointing, even allowing for usually slower growth rates at this juncture”, Investec analysts commented.

Books, newspaper and stationery seller WH Smith was down 3 percent after reporting flat sales.

British pubs group JD Wetherspoon issued upbeat guidance and strong comparable sales in the Christmas period. Its shares were up 3 percent. (Editing by Tom Pfeiffer)

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