The FTSE 100 made gains and sterling was flat as investors awaited a key government decision on airport runway expansion, and comments from Bank of England governor Mark Carney at the House of Lords.
The UK’s blue chip index edged back above the 7000-point mark, rising 0.5% to around 7018 points, dragged higher by commodity stocks following a positive trading update by Anglo American.
Sterling stood relatively flat , trading at 1.222 against the US dollar and 1.12 against the euro.
UK investors were eagerly awaiting a government decision on which airport expansion scheme should get the go-ahead.
The announcement, due today, would end more than a year of uncertainty since the Davies Commission came out in favour of a third runway at Heathrow.
Other shortlisted options are extending an existing runway at Heathrow or building a second runway at Gatwick.
Attention will later turn to Bank of England governor Mark Carney who is set to face a grilling by the House of Lords Economic Committee on the economic consequences of the Brexit vote and the Bank of England’s response to the referendum.
Kathleen Brooks, the city director at City Index, said Mr Carney’s comments could unsettle the pound.
“If Carney voices concerns about the deteriorating relationship with the Government then this would be the worst outcome for the pound in our view, as the last thing an already Brexit-frazzled FX market needs now is discord between the UK authorities
“It could also make it more likely that Carney will quit his post in 2018, right in the middle of the UK’s Brexit negotiations,” she said.
Across Europe, the French Cac 40 and the German Dax were trading higher, up around 0.3% and 0.5% respectively. It comes after the Ifo business climate survey for Germany rose to 110.5 points in
October from 109.5 in September, with the manufacturing outlook rising to a two-year high.
In oil markets, Brent crude pared losses, rising 0.6% to 51.76 US dollars per barrel amid uncertainty over which producers would be included in Opec’s tentative supply freeze. Iraq reportedly was seeking an exemption from the deal.
On the FTSE 100, resource-linked shares rallied after Anglo American maintained its output guidance and reported better market conditions for its diamond unit.
Anglo American topped the index, rising 39p to1105p. It pushed other commodity stocks higher, including Antofagasta, which rose 18p to 543p, Rio Tinto which rose 74p to 2750p, and Glencore which jumped 6.3p to 243.9p.
Shares in Whitbread fell 96p to 3746p despite reporting a 3.4% rise in pre-tax profit to £263.6 million in the first half of the year, while revenue grew 8.1% to £1.56 billion.
However, Whitbread said that it will closely monitor the risk of a “wider macro-economic effect as a result of the UK leaving the EU, including foreign exchange and interest rate fluctuations”.
Away from the top tier index, Carpetright shares dipped 0.8p to 195p after reporting a sales slump in the first half of the year and warning that the collapse in sterling will increase costs.
The group said that stiff competition led to a 2.9% decrease in like-for-like sales in the UK during the period.