By Carla Mozee and Victor Reklaitis, MarketWatch

Retail sales drop in December; traders track Trump inauguration

U.K. stocks ended slightly lower Friday, breaking a string of weekly wins, with investors waiting to hear what Donald Trump may say about his economic plans as he's sworn in as the U.S.'s 45th president.

The FTSE 100 closed down 0.1% at 7,198.44, after earlier managing to turn slightly higher as the British pound dropped in the wake of a downbeat update on retail sales activity in December. A weaker pound can help multinational companies as their products can become less expensive to buy for overseas investors. Also, earnings made overseas are boosted when translated back into sterling terms.

Caution appeared to set in ahead of Trump's inauguration in Washington, D.C. The swearing-in ceremony was starting as London trade wrapped up, at 4:30 p.m. London time, or 11:30 a.m. Eastern Time.

See:MarketWatch's live blog and video of Trump's inauguration (http://blogs.marketwatch.com/capitolreport/2017/01/20/donald-trump-to-be-inaugurated-as-45th-president-live-blog-and-video/)

And read:What time is the inauguration? (http://www.marketwatch.com/story/when-is-the-inauguration-2017-01-17)

Investors worldwide will look for "confirmation that he plans to follow through with his pre-election rhetoric and push massive fiscal stimulus through Congress, as well as easing regulatory burdens," which could reignite the dollar's postelection rally, Charalambos Pissouros, senior analyst at IronFX Global Ltd., said in a note.

For the week, the FTSE 100 endured a fall of 1.9%, after climbing for six weeks in a row. On Monday, the benchmark broke a 14-day winning streak (http://www.marketwatch.com/story/ftse-100-notches-small-gain-as-pound-slides-on-hard-brexit-fears-2017-01-16), the longest on record for British blue chips. That string of gains also contained 12 consecutive all-time closing highs.

Part of the FTSE's 100 loss this week stemmed from Tuesday's rally in the pound. During trading that day, sterling surged nearly 3% against the dollar after U.K. Prime Minister Theresa May said terms of the final Brexit deal negotiated between U.K. and EU officials would be put to a vote in the British parliament.

If Trump during his inauguration speech "avoids the crucial topics of fiscal and regulatory reforms once again, or if his stance towards them seems less confident than preelection, the dollar could resume its downward correction, as investors become increasingly impatient regarding the absence of details on the nation's fiscal direction," Pissouros said.

Banking shares globally have been among the beneficiaries of a post-election rally, on expectations the industry may enjoy a more relaxed regulatory environment during a Trump administration.

In London trade Friday, Lloyds Banking Group (LLOY.LN) (LLOY.LN) shares closed up 0.5% and Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) was higher by 0.4%.

Pound and data: On Friday, the pound dropped to $1.2287 after data showed U.K. retail sales fell 1.9% in December (http://www.marketwatch.com/story/uk-retail-sales-slow-at-fastest-rate-since-2012-2017-01-20) month-over-month, missing expectations for rise of 0.2%, according to FactSet. Sales slowed at the fastest rate since 2012. Sales in December year-over-year rose 4.3%, but that missed expectations for growth of 7.3%.

The pound bought $1.2327 ahead of the release, and changed hands late Thursday at $1.2299. It was recently at $1.2330.

"It seems trading volumes in December could not live up to the levels around Black Friday in November, which was expected, but it was surprise just how big a drop we've seen," wrote Craig Erlam, senior market analyst at Oanda.

"While sales were still massively up on last year, it will be interesting to see whether higher prices lead to a more sustained decline in consumer appetite or whether the impressive earnings growth we've seen ensures a swift rebound in the coming months," he said.

Other movers: Whitbread PLC (WTB.LN) rose 1.2% following a ratings upgrade to equalweight from underweight at Barclays. The company behind the Costa Coffee and Premier Inn hotel chains is slated to release third-quarter earnings on Thursday.

Next week, there will be a pickup in the amount of financial and trading updates from London-listed companies.Among them, updates are due from easyJet PLC (EZJ.LN) , miner BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) and Johnnie Walker scotch maker Diageo PLC (DEO) .

 

(END) Dow Jones Newswires

January 20, 2017 11:47 ET (16:47 GMT)

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