U.K. stocks erased an earlier loss and ended higher Tuesday after the pound pulled back from its highest level since the Brexit vote, following a mixed report on the British labor market. While the data showed wages now are rising faster than inflation, traders had hoped for a stronger number to cement expectations of a Bank of England rate rise in May.
The FTSE 100 rose 0.4% to 7,226.05, climbing back from a 0.1% loss earlier in the session. The turnaround came as the pound dropped to $1.4323, losing grip of its almost 22-month Both the pound and stocks were driven by the February reading on the U.K. labormarket. Wages both with and without bonuses rose 2.8%, meaning that for the first time in almost a year wages grew slightly more than inflation. Consumer prices rose 2.7% in February. The data were in line with FactSet estimates, but some traders and analysts had hoped for wage growth including bonuses to come in at 3%. Such a reading was seen as strengthening the case for a BOE rate rise in May and the disappointment yanked the pound lower The unemployment rate, however, surprised to the upside, falling to the lowest level since 1975 at 4.2%, down from 4.3% in January. U.K. inflation data out on Wednesday and retail sales figures on Thursday are now likely to be closely watched for any indications that they’ll seal the deal for a May rate hike. Shares of Associated British Foods closed up 4.1% after the Primark parent said first-half pretaxprofit declined, but also backed its full-year guidance. Outside the FTSE 100, shares of JD Sports Fashion PLC rose 5.2% after the retailer said full-year pretaxprofit for fiscal 2018 jumped 24%.
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