UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Stocks in London follow Wall Street higher

U.K. stocks leapt Friday, following U.S. stocks in their recovery effort and putting London's blue-chip market on course to log its best weekly performance in more than a year.

Stocks held to gains after the U.K. government reported a larger-than-expected slowdown in retail sales growth last month.

How markets are performing

The FTSE 100 drove up 0.8% to 7,288.34. The telecom and utility groups topped advancers, while only the basic materials sector lagged. On Thursday, the benchmark rose 0.3% (http://www.marketwatch.com/story/ftse-100-moves-solidly-higher-as-oil-and-mining-stocks-rise-2018-02-15), a third straight winning session.

British retail sales missed expectations, but sterling remained on track for a weekly jump of 1.8% against the U.S. dollar . The pound bought $1.4089, down from $1.4100 late Thursday in New York.

Check out:Here's why the U.S. dollar isn't getting much love (http://www.marketwatch.com/story/heres-why-the-us-dollar-is-nobodys-valentine-2018-02-14)

The yield on the 10-year gilt was down 4 basis points to 1.60%, according to Tradeweb. Yields fall when prices rise.

What's moving markets

U.K. and broader European markets appeared to be taking their cue from Wall Street. U.S. stocks on Thursday overcame intraday losses to finish higher for a fifth straight session (http://www.marketwatch.com/story/dow-on-pace-for-5th-win-in-a-row-helped-by-ciscos-earnings-driven-jump-2018-02-15), leaving the Dow Jones Industrial Average back above 25,000.

After the recent meltdown in global equities, the FTSE 100, like the Dow and the S&P , is set for weekly gains. The FTSE 100 is looking at a rise of 2.6%, and that would be its best week since December 2016 as well as the first gain after four straight losing weeks.

The recent global selloff in equities is seen as prompted partly by a rise in U.S. bond yields amid signs of an uptick in inflation. But after the release this week of stronger-than-expected U.S. inflation data (http://www.marketwatch.com/story/cpi-surges-05-in-january-but-yearly-rate-of-inflation-unchanged-2018-02-14), investors have been scooping up beaten-down stocks.

Read:This market selloff was overdue, but now it looks overdone, strategists say (http://www.marketwatch.com/story/this-market-selloff-was-overdue-but-now-it-looks-overdone-strategists-say-2018-02-10)

What strategists are saying

"Where Wall Street goes, other markets follow, and this bounce back from last week's lows is no different. Traders are quickly getting used to higher bond yields, higher inflation and another round of hikes in global interest rates that will follow, so much so that U.S. stocks are recovering twice as fast as in London," said Lee Wild, head of equity strategy at Interactive Investor.

"Markets will remain volatile, for sure, but we've just found out that big investors can't stay out of this market for long, and demand for equities typically picks up in the weeks before tax year-end," Wild said in a note.

Economic data

Growth in consumer spending slowed more than expected in January. Retail sales increased 0.1% on the month (http://www.marketwatch.com/story/uk-retail-sales-growth-slows-more-than-expected-2018-02-16), the Office for National Statistics said, missing expectations of 0.6% in a Wall Street Journal survey of analysts. The result comes after sales dropped 1.4% in December.

Sales rose 1.6% year-over-year, lower than the 2.4% rate in the year-ago period.

"The Bank of England says wage growth is on an upward trajectory, while inflation may well have peaked. This means we could see an end to falling real wages in the coming months, which would provide a welcome fillip to cash-strapped households," said Ben Brettell, senior economist at Hargreaves Lansdown, in a note.

"Assuming pay growth figures over the next couple of months back up this theory, it still looks like the Monetary Policy Committee will have the confidence to raise interest rates to 0.75% in May," he added.

Stock movers

Segro PLC shares (SGRO.LN) jumped 6% after the property-investment company raised its dividend by 6.1% (http://www.marketwatch.com/story/segro-2017-profit-more-than-doubles-2018-02-16-24853926), and said pretax profit for 2017 more than doubled to GBP976.3 million.

Among the handful of FTSE decliners, iron ore miners Rio Tinto PLC (RIO) (RIO) (RIO) and Glencore PLC (GLEN.LN) fell 0.9% and 0.7%, respectively.

(END) Dow Jones Newswires

February 16, 2018 07:15 ET (12:15 GMT)

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