By Eamon Quinn
Sterling fell, helping to boost Ftse-100 stocks, amid new concerns about the outcome of Brexit talks.
With Wall Street closed for its Labor Day, analysts focused on European markets.
The Ftse-100 index rose because it has many international firms whose earnings benefit when sterling falls against the dollar and the euro. The euro climbed 0.75% to 90.24 pence against sterling.
“A renewed drop for sterling on fresh Brexit pessimism has allowed the Ftse to remain top of the pile in today’s still-light trading,” said Chris Beauchamp, Chief Market Analyst at online broker IG.
“Thanks to the US holiday, the first trading day of September has a distinctly August vibe to it, but with London’s main index back to the key 7500 area it seems like there is no shortage of buyers willing to step in as they did in June and August.”
There was less positive news for UK companies, however, as British manufacturers had their weakest month in over two years and export orders suffered a rare decline in August, a warning that a world economic slowdown, as well as the approach of Brexit, is weighing on its factories.
The IHS Markit-CIPS UK Manufacturing Purchasing Managers’ Index (PMI) fell to 52.8, its lowest level since July 2016, immediately after the Brexit vote. Economists said that the prospect of the UK leaving the EU in March next year without any trade agreement appeared to be weighing on sentiment.
“The main reason for the fall in the headline orders was a contraction in export orders, suggesting that the possibility of a no deal exit from the EU in March and a moderation in global growth is starting to weigh more heavily on the sector,” said Andrew Wishart, UK economist at consultants Capital Economics.
Rob Dobson, an IHS Markit director, said UK manufacturing — which accounts for about 10% of Britain’s economy — looked increasingly lacklustre in August.
“The latest PMI report is broadly consistent with zero growth in manufacturing production, meaning the sector will likely fail to provide any support to the wider UK economy in the third quarter,” he said.
In contrast, the Investec Manufacturing PMI report for Ireland showed factories expanded their output.
The Irish headline PMI reading rose to 57.5 in August, a seven-month high, from 56.3 in July amid sharp increases in both output and new orders, said Investec chief economist Philip O’Sullivan.
Additional reporting Reuters