U.K. stocks slipped from record highs on Tuesday, as the pound ignored worse-than-expected British manufacturing data and rallied against the dollar. The FTSE 100 index fell 0.5% to close at 7,648.10, easing back from the all-time closing high scored on Friday, the last trading session of 2017. The London benchmark logged a 7.6% gain for the full year, for its second straight year of advances. The pound rose to $1.3585, up from $1.3502 late Monday in New York, trading around its highest level since late September. Sterling’s gain was largely due to broad-based dollar weakness. The pound rally squeezed U.K. stocks and particularly weighed on the big multinationals in the FTSE. As around 75% of revenues for the index are made overseas, an appreciation in sterling hits profits when converted back into the U.K. currency. Sterling stayed higher even after data from IHS Markit/CIPS showed the U.K. manufacturing PMI dropped to 56.3 in December from November’s 51-month high of 58.2. The consensus forecast called for a reading of 58, according to FactSet. A reading above 50 indicates expansion.
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