By Carla Mozee, MarketWatch
Pound falls after disappointing U.K. manufacturing data
U.K. stocks rose Friday, with mining shares strengthening and
Lloyds Banking Group PLC surging after quarterly results. But the
pound dropped following disappointing U.K. manufacturing data.
The FTSE 100 was up 0.1% at 6,965.85 but has been swaying
between gains and losses. Trading in most other European markets
were closed for the Labour Day holiday. See: Which markets are
closed for Europe's Labour Day?
(http://www.marketwatch.com/story/which-markets-are-closed-for-europes-labor-day-2015-04-30)
The FTSE 100 was on track for a weekly decline of 1.4%.
Financials: Lloyds shares topped the benchmark, with a 7.2%
jump, the best since August 2013, according to FactSet data. The
company posted a 21% rise in underlying profit
(http://www.marketwatch.com/story/lloyds-profit-falls-on-tsb-sale-cost-of-1-billion-2015-05-01)
to GBP2.2 billion. However, net profit fell, with Lloyds incurring
a GBP660 million loss related to the sale of its TSB Banking Group
PLC unit .
"Lloyds delivered a solid set of [first-quarter] numbers," said
analysts at Goldman Sachs.
While Lloyds shares climbed Friday, "broader macro/political
uncertainty with the upcoming U.K. election will likely continue to
mean the stock remains constrained until then," said Credit Suisse
analysts. The general election will be held May 7, with polling
suggesting a tight race for Britain's biggest political
parties.
Banking heavyweight HSBC PLC (HSBC) will release its
first-quarter financial results on Tuesday. Shares were off 0.5% on
Friday.
Meanwhile, Barclays PLC (BCS) shares were down 0.5% after a
ratings cut at Berenberg, to sell from hold. Barclays is "one of
our wild cards" for this year, as it holds the potential to emerge
as a long-term winner in the sector," wrote Berenberg analyst James
Chappell. "Unfortunately, that change seems further away than we
had hoped, as the malaise from the lackluster investment-bank
strategy has worsened."
Elsewhere among financials, Prudential PLC on Friday named Mike
Wells as group chief executive, effective June 1. Wells currently
serves as the head of Prudential's U.S. operations. Prudential
shares hit an intraday high at GBP16.38 ($25.04) after the
announcement, but have since drifted lower by 0.7%. Wells will
succeed Tidjane Thiam, who's taking the top job at Credit Suisse AG
.
Miners: But mining stocks were higher Friday, after data showed
manufacturing activity in China, a major buyer of commodities,
remained in expansionary territory in April
(http://www.marketwatch.com/story/china-manufacturing-activity-holds-steady-2015-04-30-214854532).
Separately, Brazilian iron-ore producer Vale (RIO) on Thursday
signaled it's considering cutting output
(http://www.wsj.com/articles/brazils-vale-considers-cutting-iron-ore-output-1430412392)
for the raw material that's used to produce steel.
Shares of the largest iron-ore producers, Rio Tinto PLC and BHP
Billiton PLC, leapt in London. Rio Tinto (RIO) climbed 4.7%, and
BHP (BHP) stepped higher by 3.3%. Anglo American PLC gained
4.9%.
Pound: Sterling (GBPUSD) dropped to an intraday low of $1.5268
after data showed British manufacturing activity in April fell to a
seven-month low
(http://www.marketwatch.com/story/uk-manufacturing-pmi-falls-to-seven-month-low-2015-05-01).
Markit's purchasing managers index fell to 51.9, from 54 in
March.
As of late, there's been "very weak economic data for the U.K.
from GDP to PMI and all this creates more trouble for [Prime
Minister David] Cameron," ahead of next week's election, wrote
Naeem Aslam, chief market analyst at AvaTrade, in a note.
Currency traders "are going to take some profit off the table by
closing most of the positions going into the long weekend and with
the looming uncertainty of the U.K election," he added.
The pound late Thursday traded at $1.5353.
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