By Siddarth S and Shreyashi Sanyal
(Reuters) -London’s FTSE 100 rose on Tuesday as the pound fell after data showed Britain’s labour market weakened in July, even as wage growth stayed strong, while a plunge in Smurfit Kappa’s shares capped gains.
The exporter-heavy FTSE 100 index closed up 0.4%, gaining for the fourth straight day amid the weaker pound. Mid-cap stocks rose 0.1%.
Data showed Britain’s unemployment rate ticked up to 4.3% in the three months to July, from 4.2% in June. However, average weekly earnings growth climbed to 8.5% in annual terms, up from 8.4% a month earlier and marking a new high, excluding distortions during the COVID-19 pandemic, in records dating back more than 20 years.
“Wage growth is still hot in Britain and the temperature isn’t coming down much,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown, “providing little relief for Bank of England policymakers who need more evidence that employers are showing restraint before they’ll feel confident about pressing pause on interest rate hikes.”
Most investors think the Bank of England (BoE) will raise interest rates again on Sept. 22 to 5.5% from 5.25%, perhaps for the last time in the current cycle.
Traders see a 78% chance of the BoE lifting rates by 25 basis points at its September meeting.
Focus will shift to UK July GDP data and U.S. consumer price numbers on Wednesday.
Associated British Foods shares rose 5.3% to the top of the benchmark index after the Primark owner raised its full-year profit outlook for the second time in four months.
AstraZeneca bounced 1.7% after falling more than 4% in the previous session, as the drugmaker appeared to play down speculation about its CEO’s future.
Europe’s largest paper and packaging producer Smurfit Kappa said it would buy U.S. rival WestRock for an agreed $11 billion to create the world’s largest listed paper and packaging company.
London-listed shares of Smurfit Kappa slumped 9.8% as some analysts said the company was paying a hefty premium.
(Reporting by Siddarth S and Shreyashi Sanyal in Bengaluru; Editing by Janane Venkatraman and Mark Potter)
