By Carla Mozee, MarketWatch
But miner shares struggle after China tightens monetary policy
U.K. stocks closed at a two-week high Friday, achieving a small weekly rise, as bank shares climbed on plans by U.S. President Donald Trump to dismantle some U.S. regulations on the financial-services sector.
The FTSE 100 ended higher by 0.7% at 7,188.30, but the basic materials group was stuck in the red. The index notched its highest close since Jan. 20, FactSet data showed. The London benchmark on Thursday rose 0.5% (http://www.marketwatch.com/story/ftse-100-in-holding-pattern-ahead-of-bank-of-englands-super-thursday-2017-02-02). For the week, the benchmark managed to turn higher, logging an advance of 0.1%.
On Friday, banks climbed on reports Trump plans to sign an executive action to scale back the 2010 Dodd-Frank (http://www.marketwatch.com/story/trump-administration-plans-to-scale-back-dodd-frank-law-2017-02-03) financial-overhaul law, as part of a push to peel back much of the regulatory system put in place after the financial crisis.
In the wake of Dodd-Frank's passage, "banks have devoted a lot more capital towards compliance and have had to decrease leverage, both of which are a direct hit to profitability. If Dodd-Frank is watered down, that's a direct boost to the bottom line for banks," said Jasper Lawler, senior market analyst at London Capital Group, in a note.
Shares of lending heavyweight Barclays PLC (BCS) (BCS) jumped 3.4%. Royal Bank of Scotland Group (RBS.LN) (RBS.LN) added 2.7%, and Lloyds Banking Group PLC (LLOY.LN) picked up 1.5%. HSBC Holdings PLC (HSBA.LN) (HSBA.LN) (HSBA.LN) ended up 1.2% and Standard Chartered PLC (STAN.LN) moved up 1.3%.
U.K. stocks ended near session highs after a stronger-than-expected 227,000 jobs (http://www.marketwatch.com/story/us-adds-227000-new-jobs-in-january-2017-02-03)were created in January in the U.S., indicating continued overall strength in the world's largest economy. The Bank of England this week cited "anticipation of a more expansionary U.S. fiscal stance" (http://www.bankofengland.co.uk/Pages/reader/index.aspx?pub=feb&page=1) as a factor driving up expectations for stronger global growth, which in turn, aids the British economy.
The Bank of England on Thursday raised its growth forecasts for 2017 and 2018 within its Quarterly Inflation Report (http://www.marketwatch.com/story/bank-of-england-sees-stronger-uk-growth-but-stays-neutral-on-interest-rate-outlook-2017-02-02).
Miners retreat: But mining stocks were crunched after China's central bank raised key interest rates in the money market (http://www.marketwatch.com/story/china-tightens-monetary-policy-via-repo-rates-rise-2017-02-03) Friday, part of a shift by Beijing toward tighter monetary policy. China is a major buyer of industrial and precious metals.
Shares of Glencore PLC (GLEN.LN) (GLEN.LN) gave up 4.8%, and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) fell 2.5%. Anglo American PLC (AAL.LN) and Antofagasta PLC (ANTO.LN) each lost 3.3%.
Rio Tinto PLC (RIO) (RIO) (RIO) ended lower by 3.5%. The iron ore producer is slated to release quarterly results on Wednesday.
Separately, the Caixin China manufacturing purchasing managers index (http://www.marketwatch.com/story/china-caixin-manufacturing-pmi-shows-growth-battle-2017-02-03), a private gauge of nationwide factory activity, edged down to 51.0 in January from 51.9 in December.
Movers:Multinational companies listed in London marched higher, aided by weakness in the pound, as the bulk of their revenue and profit comes from outside the U.K.
Drugmakers were among those advancers. AstraZeneca PLC (AZN.LN) (AZN.LN) moved up 2%, Hikma Pharmaceuticals PLC (HIK.LN) (HIK.LN) rose 0.9%, and GlaxoSmithKline PLC (GSK.LN) (GSK.LN) added 0.7%.
The pound fell to $1.2502 from $1.2524 late Thursday in New York.
Sterling fell after data released Friday showed growth slowed in the key U.K. services sector in January (http://www.marketwatch.com/story/uk-services-pmi-slips-signals-economic-headwind-2017-02-03). The services sector accounts for roughly three-quarters of British gross domestic product, which expanded at a rate of 2.2% in 2016 despite Brexit uncertainty.
The pound on Thursday was chopped down below $1.26 after the Bank of England failed to take a hawkish tone on the outlook for interest rates.
"Fortunes were reversed for the pound yesterday, despite the Bank of England upgrading its growth forecasts for the year, after Mark Carney cited Brexit as still carrying risks, not least as a result of rising inflation," said Tony Cross, market analyst for TopTradr.
Read:Time to buy the beaten-down pound? Bank of America spots a sterling bottom (http://www.marketwatch.com/story/time-to-buy-the-beaten-down-pound-bank-of-america-spots-a-sterling-bottom-2017-02-01)
And: Brexit bill clears key hurdle in parliament--what happens next? (http://www.marketwatch.com/story/brexit-bill-works-its-way-through-parliament-what-to-watch-2017-02-01)
(END) Dow Jones Newswires
February 03, 2017 12:22 ET (17:22 GMT)
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