UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Auto insurers warn of profit declines on change in rate calculation

U.K. stocks rose Monday, benefitting from the pound's drop to its lowest in more than a week, but shares of London Stock Exchange Group PLC were hit on growing worries that its plans for a merger will collapse.

The FTSE 100 rose 0.4% to 7,273.94, with all but the basic materials sector showing gains. The index on Friday fell 0.4% (http://www.marketwatch.com/story/ftse-100-loses-ground-as-rbs-leads-banks-lower-2017-02-24) and closed last week's trading down by 0.8%. That broke the benchmark's three-week run of wins.

But overall gains on Monday came in part on the back of a falling pound following reports that U.K. Prime Minister Theresa May is preparing for Scotland's First Minister Nicola Sturgeon to call for a second referendum on whether Scotland should break away from the U.K.

A weaker pound can help boost profit and revenue made overseas by multinational companies listed on the FTSE 100. The pound fell as low as $1.2384 Monday. It hadn't traded below $1.24 since Feb. 17, FactSet data showed.

"The U.K.'s decision to quit the European Union had immediately triggered questions regarding Scotland's future in the United Kingdom. However, the eventuality hasn't been largely factored in the pound's value so far," Ipek Ozkardeskaya, senior market analyst at London Capital Group, said in a Monday note.

The pound eventually pared losses and bought $1.2402 compared with $1.2555 late Friday in New York.

Movers: Shares of London Stock Exchange (LSE.LN) fell 3.3% after the LSE said late Sunday it wouldn't sell its majority-owned fixed-income trading platform in Italy (http://www.marketwatch.com/story/merger-between-london-stock-exchange-deutsche-borse-in-doubt-2017-02-26) to offset antitrust concerns its plan to merge with Deutsche Börse AG (DB1.XE) . The LSE says the Italian asset is a major source of revenue and profit.

AB Foods shares (ABF.LN) fell 1.2%, but they had been higher in early trade after the food, ingredients and retail group projected that sales at its Primark chain for the first half would be 21% ahead of last year at actual exchange rates. (http://www.marketwatch.com/story/ab-foods-projects-rise-in-sales-at-primark-2017-02-27)

Admiral Group PLC (ADM.LN) was knocked down 3.8% after the auto insurer said 2016 reported profit would be reduced by 70 million pounds ($87 million) to GBP100 million because of a change in the discount rate used by U.K. courts to calculate personal injury damages awards (http://www.marketwatch.com/story/admiral-warns-of-profit-drop-on-uk-rate-change-2017-02-27).

Direct Line Insurance Group (DLG.LN) said the rate change would reduce its pretax profit between GBP215 million ($266.6 million) and GBP230 million. The company's shares tumbled 6.3%.

(END) Dow Jones Newswires

February 27, 2017 04:30 ET (09:30 GMT)

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