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Europe markets on the up; FTSE rises as sterling dips; UK's May forms government alliance

Silvia Amaro
Updated
Getty Images. Bourses in Europe were hovering around the flatline on Friday morning as investors reacted to a hung parliament in the U.K.'s General Election.

Bourses in Europe provisionally closed higher on Friday afternoon after British Prime Minister Theresa May announced that she would form a government alliance with Northern Ireland's Democratic Unionist Party (DUP) following an inconclusive general election.

The pan-European Stoxx 600 (STOXX: .STOXX) ended the day up 0.27 percent in afternoon deals, and all major bourses ticked up on May's announcement, which pledged a future of "certainty" for the U.K. Her Conservative party will be backed by the DUP in order to secure a parliamentary majority. May received approval from the Queen to remain in power early Friday afternoon.

The FTSE 100 (FTSE International: .FTSE) maintained gains throughout Friday trading, ending the day up almost 1 percent. This was supported by a fall in sterling with many big conglomerates on the index earning revenues in U.S. dollars. The pound was down nearly 2 percent against the dollar in early deals and stood at $1.2738 in afternoon deals.

The political uncertainty sent the biggest U.K. house builders and construction material retailers to the bottom of the European benchmark early Friday as investors worried that decisions to purchase houses might be impacted. Berkeley Group (London Stock Exchange: BKG-GB) was down 3.3 percent in afternoon deals, while Taylor Wimpey (London Stock Exchange: TW.-GB) was lower by more 2 percent. Travis Perkins (London Stock Exchange: TPK-GB) was at the bottom of the benchmark, down 3.7 percent. The sector overall, however, was up 0.79 percent to become the best performer.

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Other U.K.-listed companies such as Sainsbury's (London Stock Exchange: SBRY-GB), Next and Marks and Spencer (London Stock Exchange: MKS-GB) also moved south on concerns that the political instability may hurt consumer sentiment and purchasing power.

British banks also suffered from the election outcome. RBS (London Stock Exchange: RBS-GB) and Lloyds (London Stock Exchange: LLOY-GB) were both down by more than one percent. Those more internationally-focused such as HSBC and Standard Chartered rose about 2 percent given their lower exposure to the U.K. economy.

May confirmed in a speech to Downing Street on Friday afternoon that Brexit talks are to go ahead as scheduled from June 19.

U.S. markets meanwhile opened higher as stocks appeared to shake off the U.K. election shock.

Other market moves

Swedish biometrics company Fingerprints B was at the top of the European benchmark, up more than 10 percent, marking a 10-week high.

Earlier in the session, shares of Ubi Banca (Milan Stock Exchange: UBI-IT) were halted from trading after rising 6.5 percent. The stock seemed to have been supported by a rating upgrade from local brokerage Equita . It was up 4.4 percent in afternoon deals.

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