There were relatively subdued conditions during the European session on Wednesday with a very measured reaction to the Chinese GDP, which was in line with expectations.
After opening little changed, the FTSE index drifted weaker with selling interest above 7,000.
The latest UK labour-market data was relatively close to expectations with a smaller than expected increase in the claimant count offset by an upward revision to August’s data. Unemployment held at 4.9% with a 2.3% increase in average earnings from a revised 2.4% previously. The data overall failed to provide any significant impetus to the equity market with no immediate implications for monetary policy.
There was a sharp move higher in gold prices during the European session and oil also strengthened significantly, which provided net support to the UK equity market.
There were further concerns surrounding the Brexit negotiations after German officials reiterated that there would be no negotiations before the triggering of Article 50.
There was no significant reaction to the US economic data with a decline in housing starts offset by an increase in building permits and US bond yields were little changed.
US stocks were slightly higher at the European close, although overall ranges were relatively narrow with European bourses also mixed at the close.
There was a further strong lift to crude prices following the latest inventories data with Brent trading at 14-month highs. The fresh gains in oil and a very solid tone in gold prices underpinned the market late in the US session.
At the close, there was a gain of 21.86 points and 0.31% at 7,021.92, the highest close for five days.
The latest UK retail sales data will be released on Thursday and the latest ECB meeting will also be an important focus given the potential for a significant impact on currency rates and European equity markets.
FTSE 100 Daily Chart
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