Getty Commuters walk across London Bridge.
U.K. stocks rose Monday, tracking an upbeat mood on Wall Street where U.S. stocks extended last weeks rally as concerns about rising inflation and the impact itd have on interest rates appeared to fade.
Gains for equities also came following news the U.K.s opposition party is in favor of Britain staying in the European Unions single market after the countrys planned exit from the bloc next year.
How markets moved
The FTSE 100 index
rose 0.6% to end at 7,289.58, closing at its highest level since Feb. 16 and logging its first gain in three sessions, according to FactSet data.
fetched $1.3960, up from $1.3969 late Friday in New York. Sterling earlier traded as high as $1.4070.
Whats driving markets
The FTSE 100 started Mondays session in the green, in line with advances across Europe and Asia, after Fridays rally on Wall Street that left the major U.S. benchmarks
up by more than 1% each. Those gains came after the Federal Reserves semi-annual monetary report may have eased worries about the prospect of more aggressive policy action. U.S. stocks also rose on Monday, providing a lift to European stocks toward the end of the session as well.
Meanwhile, the pound briefly rose back above $1.40 as Bank of England Deputy Gov. Dave Ramsden in a Sunday Times interview said a stronger pace of wage growth could warrant another rate increase by the central bank. Ramsden was one of two policy makers who voted against a rate hike in November, the first BOE rate increase in a decade.
And in politics, the head of the U.K.s opposition Labour Party, Jeremy Corbyn, in a speech Monday said his party supports Britain creating a bespoke deal with the EU that would give the U.K. full access to the EUs single market. Thats at odds with U.K. Prime Minister Theresa May, who has said Britain will leave the EU customs union so it can strike free-trade deals on its own outside of the bloc.
Read: Jeremy Corbyn turns up Brexit heat on May by backing EU customs union
Sterling late Friday rose after reports the 11-member Brexit cabinet committee agreed on a proposal for post-Brexit trade with the EU that could establish a similar trade deal that Canada has with the bloc, but with better access to the EUs single market.
A stronger pound sometimes weighs on the FTSE 100 as about 75% of the benchmarks revenues are made overseas and therefore shrinks when translated back into sterling.
Associated British Foods PLC shares
rose 3.1% after the owner of fast-fashion retailer Primark said it expects to report sales growth at all of its divisions for the first half of fiscal 2018, apart from its sugar unit.
Off the FTSE 100, Bank of Ireland Group PLC shares
fell 3.3% as the lender posted an 18% decline in pretax profit in 2017 but said it will pay its first dividend in 10 years, or since the global financial crisis.
The macroeconomic environment and outlook in Ireland and the U.K., which are the groups key markets, continued to be favorable in 2017, acknowledging Brexit uncertainty continues, but has had no immediate impact on credit quality, the bank said in its annual-results statement.
Meanwhile, a group representing pilots at Ryanair Holdings PLC
are calling on CEO Michael OLeary to resign, a Reuters report said Monday. The European Employee Representative Council says pilots are receiving more requests to work during their days off and that further cancellations are in store because pilots continue to resign. Ryanair shares ended 0.7% higher on Monday.
What strategists are saying
The recovery in European equity markets is still being played out. Investors are becoming more content to buy back into the market, and the memory of the sharp sell-off at the start of the month is continuing to fade. Dealers are coming around to the idea that the positive market momentum is here to stay, said David Madden, market analyst at CMC Markets UK, in a note.
Inflation and U.S. monetary policy has been the catalyst for recent volatility and remains the center of attention, with all eyes on [Fed Chairman] Jerome Powells economic testimony this week, among other calendar items, said Rebecca OKeeffe, head of investment at Interactive Investor, in a note.
U.K. mortgage approvals came in at 40,117 in January, according to data from the British Bankers Association, or BBA. Thats 11% from 36,085 in December, but a decline of 9.4% from 44,259 in January 2017.