Sterling knocked by GDP downgrade

The FTSE 100 Index enjoyed more festive cheer in the last full trading day before Christmas today though the pound took a knock after it emerged UK growth was not as strong as first thought.

Sterling knocked by GDP downgrade

The FTSE 100 Index enjoyed more festive cheer in the last full trading day before Christmas today though the pound took a knock after it emerged UK growth was not as strong as first thought.

London’s top-flight was up 21.4 points to 6598.2 but the currency was lower as figures showed gross domestic product (GDP) increased by 2.6% between the third quarter of 2013 and the same period this year, down from a previous estimate of 3%.

With the recovery not as far advanced as previously announced, sterling came under pressure against the US dollar, slipping a cent to its lowest level in 16 months at 1.55. It was also slightly lower versus the euro at just over 1.27.

But the brighter picture for the FTSE 100 saw it build on last week’s 3.9% rise.

The ’Santa rally’ means there are still slim hopes that the top-flight can finish the year higher than its starting level of 6749 – avoiding its first fall since 2011.

The rally came even though the price of Brent crude continued to languish near the 60 US dollars a barrel mark, reflecting signs that Saudi Arabia is focused on maintaining its market share rather than cutting back production.

Elsewhere, Germany’s Dax and France’s Cac 40 were also ahead while New York’s Dow Jones Industrial Average hit new heights as it surpassed 18,000 points for the first time.

Wall Street rallied on revised figures showing the US economy grew at the fastest rate since 2003 in the third quarter.

Meanwhile in London, Tesco recovered some of its recent losses to stand 2% or 3.6p higher at 184.6p while rival Morrisons was 4.4p stronger at 180.4p and Sainsbury’s climbed 4.5p to 244.1p.

The first day of trading for Indivior, the pharmaceuticals business spun out of consumer products business Reckitt Benckiser, saw its shares jump by 25% or 30p to 150p.

Reckitt was 110p lower at 5200p after Exane BNP Paribas revisited its rating on the blue-chip stock in the wake of the demerger.

Housebuilders also peppered the fallers’ board after the British Bankers Association reported a “sharp chill” in the housing market after the number of mortgage approvals made to home buyers slid by a fifth in November.

Persimmon fell 21p to 1572p, while FTSE 100 newcomers Barratt Developments lost 6.9p to 459p and Taylor Wimpey dropped 1.8p to 134.7p.

Meanwhile, chocolate maker Thorntons slumped 22% – off 26.2p to 92p – after it warned that its earnings will fall this year because of reduced demand from some supermarkets in the run-up to Christmas.

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