September 22, 2017 / 3:50 PM / a month ago

UPDATE 1-Sterling slide sends FTSE to one-week high as Brexit speech disappoints

* FTSE 100 jumps 0.6 pct on Florence speech

* Sterling falls as PM May outlines Brexit plans

* Post-exit transition period to last 2 years

* Banks also up 0.3 pct

By Julien Ponthus and Helen Reid

LONDON, Sept 22 (Reuters) - Britain’s major share index surged in afternoon trading on Friday as Prime Minister May’s speech in Florence disappointed currency traders, sending the pound sliding.

The blue chip FTSE 100 jumped 0.6 percent to its highest in a week as sterling slipped, boosting the large-cap companies which mainly earn in foreign currencies.

Traders sold sterling as they deemed May’s speech short on detail, and hopes of a plan on how Britain might keep preferential access to the single market were dashed.

“If you watch the currency as a barometer of expectations, it hasn’t moved a great deal and that tells you everything you need to know about what the speech has changed, i.e. not very much,” said Ian Williams, strategist at Peel Hunt.

“There was not much meat on it, it was all very vague and woolly and doesn’t take us any further than we were,” he added.

In her speech May called for a post-Brexit transition period of roughly two years, appealing for a revival to negotiations which have stalled over the question of how much Britain would have to pay to end its EU membership.

Banking stocks rose 0.2 percent on the prospect of a transitional period giving financial services more time to unpick complex ties with the bloc’s financial system.

Mid-caps also rose 0.5 percent.

The FTSE has suffered from the pound’s recent gains after the Bank of England signaled an interest rate hike in the coming months.

But cross-asset strategists at Societe Generale said the correlation between the blue-chip index and sterling has loosened over the past months, suggesting a weaker pound won’t always boost it.

“The threat of Brexit continues to loom large over UK assets,” they said, pointing to slowing consumer spending and household savings rates.

On the corporate front, Smiths Group was the worst performer, down 6 percent after its two biggest businesses John Crane and Smith Medical weighed on revenue growth.

Mid-cap Pets at Home jumped 6.3 percent as analysts at Berenberg said management had a confident capital markets day on Wednesday, confirming the firm’s outlook.

Reporting by Julien Ponthus, Helen Reid, Editing by Jeremy Gaunt

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