Europe: FTSE tracks Europe higher; Shire shines

[MILAN] Britain's top share index tracked higher European markets on Friday with the mood buoyed by easing trade worries, while Shire rose after China cleared Takeda's plans to buy the drugmaker.

The FTSE 100 ended up 0.3 per cent, underpinned by gains among industrials and materials sectors, which more than offset weakness among utilities, hit earlier this week by a profit warning from SSE.

"Traders (are) hopeful about US-China trade talks despite President Trump being the fly in the ointment, downplaying prospects for quick negotiations," Accendo Markets analayst Mike van Dulken said.

President Donald Trump said on Thursday that the United States was under no pressure to make a trade deal with China, even as Chinese officials welcomed an invitation from Washington for a new round of talks with more US tariffs looming.

After the European close, however, markets were unnerved after a Bloomberg report said Mr Trump had asked aides to proceed with tariffs on US$200 billion more in Chinese goods.

The FTSE scored a small weekly gain following two consecutive weeks of losses partly due to a rally in the pound on prospects of a Brexit deal with the European Union.

On Friday, the pound slipped after touching its highest level since early August. The index, whose constituents make more than two-thirds of their sales abroad, remains down around 5 per cent so far in 2018.

Shire rose 2.2 per cent.

Takeda Pharmaceutical said China approved its purchase of Shire, the latest regulator to clear the US$62 billion deal and bring the Japanese group closer to becoming a global top 10 drugmaker.

Takeda expects the deal to close in the first half of 2019 although it needs shareholder approval to raise the funds to pay for the US$62 billion deal.

British housebuilders Barrat Developments and Taylor Wimpey came under pressure after Bank of England governor Mark Carney was reported in the Times as having told ministers that a no-deal Brexit could cause house prices to fall by 35 per cent over three years.

Their stocks recovered ground to end up 0.6 and 0.1 per cent respectively after Mr Carney clarified that the bank's "stress test" scenarios in which house prices fell sharply did not amount to a prediction from the BoE.

Mid-cap Investec rose 8.4 per cent on news it plans to hive off and separately list its asset management unit in a restructuring that comes as the long-serving company founder leaves the financial services group.

"Investec's plan to spin off its asset management arm looks like a sensible decision as it should allow management more freedom to drive that business forward and not be constrained by having to follow the strategy of the current parent which is predominantly a specialist banking business," said Russ Mould, investment director at AJ Bell.

JD Wetherspoon declined 1.3 per cent after the pub chain said it expected higher costs this year even though a record heatwave that brought in more customers lifted its full-year profit.

REUTERS