UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Barclays swings to a loss

U.K. stocks pared losses Thursday, aided by a pullback in the value of the pound, with the moves coming a day after London-listed blue-chips broke their longest winning streak in nearly a year.

A drop in shares of Royal Dutch Shell PLC after the oil giant's quarterly earnings report was weighing on London's blue-chip benchmark.

Focus is likely to turn later to the European Central Bank, which is expected to release its latest update on monetary policy. Investors will watch for any comments from ECB President Mario Draghi about economic growth in the eurozone, the U.K.'s largest trading partner.

How markets are performing

The FTSE 100 index was down 0.1% to 7,373.46, but had been as much as 0.3% lower during the session. The heavily weighted oil and gas, and basic materials groups lost ground, but the utility and consumer goods sectors led gainers.

On Wednesday, the FTSE 100 shed 0.6% (http://www.marketwatch.com/story/ftse-100-drops-after-rising-bond-yields-spur-selloff-on-wall-street-2018-04-25), the first loss in six sessions. That winning streak was the longest since mid-May 2017, according to FactSet data. The benchmark on Wednesday also fell from an 11-week closing high.

The pound bought $1.3911, down from $1.3930 late Wednesday in New York.

In the fixed-income market, the yield on the 10-year gilt was down 1 basis point to 1.52%, according to Tradeweb. The yield has been moving around two-month highs.

Read:Here's the threat to the stock market from rising bond yields (http://www.marketwatch.com/story/heres-the-threat-to-the-stock-market-from-rising-bond-yields-2018-04-24)

What's driving the market

British blue-chips fought for higher ground as sterling weakened. Against the dollar, the pound moved closer to falling below $1.39 for the first time in six weeks.

Pound weakness can bolster shares of multinational companies on the FTSE 100, as those company tend to generate most of their earnings and revenue in overseas currencies. Among that group, tobacco maker Imperial Brands PLC (IMBBY) tacked on 1.5% and advertising heavyweight WPP PLC (WPP.LN) rose 1.6%.

"GDP/USD is making attempts towards $1.3950, although on such a quiet economic calendar, pound traders are struggling to find reason to buy in," said Jasper Lawler, head of research at London Capital Group, in an note. "Traders will look ahead to tomorrow's GDP data, which if disappointing, could be the final nail in the coffin for May rate rise optimism."

Traders may keep watch on the House of Commons, where lawmakers are expected to debate and potentially vote on a Brexit motion. The motion calls for the U.K. government to negotiate the setting-up of a customs union with the European Union, for use once the U.K. leaves the EU next year.

Investors were also sorting through earnings reports, including from lender Barclays PLC and Royal Dutch Shell PLC. The oil giant's shares have the second-highest weighting on the FTSE 100 at roughly 6.1%, and those shares were in the red.

Share movers

Royal Dutch Shell (RDSA.LN) (RDSA.LN) fell 2.2% even as the oil producer reported its highest quarterly profit since 2013. First-quarter profit on a current cost-of-supplies basis -- a number similar to the net income that U.S. oil companies report -- rose 69% to $5.7 billion. (http://www.marketwatch.com/story/shell-profit-shoots-up-on-higher-gas-oil-prices-2018-04-26-24855213)The stock has charged up more than 11% this quarter, but is up by a more modest 1% year-to-date.

Taylor Wimpey (TW.LN) dropped 3.3% as the home builder posted a lower order book at the start of the year (http://www.marketwatch.com/story/taylor-wimpey-order-book-falls-sees-2018-on-track-2018-04-26). The company did say it's on track to meet its expectations for 2018.

Barclays PLC (BCS) (BCS) shares turned higher to trade up by 0.6%. The U.K.-based lender said a settlement of charges with the U.S. Justice Department helped drag it to a first-quarter loss of GBP764 million. (http://www.marketwatch.com/story/barclays-swings-to-loss-on-doj-settlement-2018-04-26)

ECB ahead

Traders will shift focus to the ECB later Thursday. In question is when the central bank will wind down its massive bond-buying program and start to raise interest rates, but little or no action is expected to take place at the April meeting.

The ECB in March surprised markets by signaling it's on track to end its stimulus program before year's end. But since then, economic data have pointed to a slowdown in the eurozone economy. That has led investors to dial back expectations for the start of rate hikes in the middle of 2019. As well, core inflation at 1% is still well below the ECB's target of near, but just below, 2%.

The ECB's policy statement is due at 12:45 p.m. London time, or 7:45 a.m. Eastern Time. Draghi will hold a news conference at 1:30 p.m. London time, or 8:30 a.m. Eastern.

See:4 outcomes for the ECB meeting, in 1 handy chart (http://www.marketwatch.com/story/4-scenarios-for-the-ecb-meeting-on-thursday-in-one-handy-chart-2018-04-24)

And read:Expect a careful, dovish Mario Draghi (http://www.marketwatch.com/story/expect-a-careful-dovish-mario-draghi-at-next-weeks-ecb-meeting-says-hsbc-2018-04-18)

(END) Dow Jones Newswires

April 26, 2018 05:39 ET (09:39 GMT)

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