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UPDATE 1-Record close for FTSE as sterling slides on Brexit impasse
October 12, 2017 / 4:40 PM / 2 months ago

UPDATE 1-Record close for FTSE as sterling slides on Brexit impasse

* FTSE 100 up 0.3 pct as sterling slips

* Asia-exposed banks weigh

* Asset manager St James Place leads gains

* Centrica, SSE recover from energy cap concerns (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Kit Rees and Helen Reid

LONDON, Oct 12 (Reuters) - Britain’s top share index enjoyed a record close on Thursday, boosted by a fresh fall in Brexit bellwether sterling after the European Union’s chief negotiator Michel Barnier said talks are in deadlock.

Britain’s FTSE 100 ended the day up 0.3 percent, at 7,556.24 points, its highest ever closing level.

The heavily internationally-exposed index earlier hit its highest intraday level in three months as the pound tumbled, but it is yet to better its 7,599-point record hit on June 2.

Sterling slid against the dollar as Barnier said talks were in an “impasse” due to an elusive compromise over the amount Britain would contribute to the EU budget, though Prime Minister May said talks were making good progress.

“UK stocks is a difficult area, in the sense that we have negotiations taking place and they’re not running as smoothly as expected,” said Lukas Daalder, chief investment officer at Robeco, who has a neutral position on the market.

“I‘m not too keen to be fully invested there,” he added.

Asset manager St James Place led index gains on the day, up 4.1 percent after a supportive note from JP Morgan analysts.

“SJP has outperformed its peers year-to-date; however its shares have drifted down around 8 to 9 percent over the past couple of months which we see as a buying opportunity,” said analysts at the bank, adding they expect continuing growth in inflows.

Budget airline easyJet also gained 2.5 percent after German peer Lufthansa said it would sign a deal to buy part of insolvent carrier Air Berlin, adding to signs of consolidation in the industry.

Energy suppliers Centrica and SSE recovered from their earlier losses, closing up 1.9 and 2.5 percent respectively after a draft bill to cap electricity prices revealed few details about the specifics of the cap, dispelling investors’ fears.

“A lot of investors think the bad news is now in the price,” said a trader, “I think they could drift up.”

Shares in Centrica have suffered this year since May proposed a price cap on the energy sector. Its shares are down more than 26 percent year to date, and near a 14-year low.

Financials took the most points off the index, with shares in Asia-exposed HSBC and Standard Chartered down 0.9 to 1.5 percent, in line with falls among European bank stocks.

Both have rallied 14 percent so far this year.

Among mid-caps, shares in Just Eat jumped 6.7 percent to hit a record high after the online takeaway firm received a provisional greenlight from Britain’s competition watchdog for its merger with Hungryhouse.

Reporting by Kit Rees and Helen Reid; Editing by Toby Chopra

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