By Carla Mozee, MarketWatch U.K. construction activity slows to
13-month low
LONDON (MarketWatch) -- U.K. stocks jumped Tuesday, with gains
for the embattled resources-sector leading the benchmark FTSE 100
to its first win in four sessions.
But the pound pulled back after U.K. data showed growth in the
key construction sector slowed last month.
The FTSE 100 climbed 1.3% to 6,742.10, with shares of Tullow Oil
PLC rising 6.3% to become the strongest advancer on the main U.K.
equity index.
Tullow shares had tumbled nearly 22% since Thursday as part of a
broader selloff in the oil sector after the Organization of the
Petroleum Exporting Countries held to its production target. That
decision was a disappointment to investors who had looked to the
group to address oversupply and a related slide in prices. Read:
OPEC is wrong to think it can outlast U.S. on oil prices
Shares of oil firm BG Group PLC surged 3.4%, BP PLC picked up
4.7%, and Royal Dutch Shell PLC tacked on 4.1%.
Oil stocks held to higher ground, though crude prices fell back
into negative territory on Tuesday. U.S. crude futures for January
delivery (CLF5) dropped below $68 a barrel, losing nearly 2%. Brent
crude also fell nearly 2% to below $72 a barrel in London.
Mining stocks were also higher, getting a breather from recent
selling as the industry grapples with slowing in the Chinese
economy and a slump in iron-ore prices. Shares of BHP Billiton PLC
(BHP) climbed 2.2% and Rio Tinto PLC (RIO) ended up by 0.7%
Friends Life Group Ltd. shares bounced up 2.4% after the company
and Aviva PLC agreed on a 5.6 billion pound ($8.8 billion) deal
that would create the U.K.'s largest insurance, savings and
asset-management company. Aviva shares edged up 0.1%.
But shares of Royal Mail PLC fell 3% after regulator Ofcom said
it won't impose new conditions on Royal Mail's direct-delivery
competitors as the "universal postal service is not currently under
threat."
Sterling: Last month, the pace of business activity among U.K.
construction companies eased, led by the weakest expansion in civil
engineering since July 2013, according to Markit and the Chartered
Institute of Procurement & Supply. Their U.K. construction PMI
came in at 59.4, the smallest expansion since October 2013.
"This is a sign that consumption within the country is slowing
down, which is a negative sign for the economy," Naeem Aslam, chief
market analyst at AvaTrade, in emailed comments. "The data has also
dampened the sentiment for an early increase in the interest rate
for sterling."
The pound (GBPUSD) fell to $1.5646 from $1.5718 ahead of the
data. Sterling late Monday bought $1.5733.
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