Stronger pound dents FTSE 100; Lloyds rises

Britain’s main stock index fell on Wednesday as a stronger pound weighed on exporters, while Lloyds Banking Group (LON:LLOY) rose 2.2% after the bank resumed a dividend despite a sharp drop in annual profit.

The blue-chip FTSE 100 index was down 0.3% by 0930 GMT as sterling rose to a three-year high against the dollar. (GBP=)

Financial stocks including HSBC Holdings (LON:HSBA) and Standard Chartered (LON:STAN) were among the biggest drags on the FTSE 100, tracking a 2.9% slump in Hong Kong’s Hang Seng index on concerns over policy tightening. Losses in consumer stocks Unilever (LON:ULVR) PLC and British American Tobacco (LON:BATS) also weighed on the index.

“The market just seems to have lost a bit of energy and the fact that we are seeing high yields has made investors a little nervous,” said Craig Erlam, senior market analyst at OANDA.

The FTSE 100 has recovered about 35% from a coronavirus-driven crash last year, but it has come under pressure more recently as fears of rising inflation have hit equities worldwide.

The mid-cap FTSE 250 index gained 0.5%, led by consumer discretionary and industrials stocks.

In company news, Metro Bank fell 6.9% as it posted a much bigger annual loss and said it expects defaults to rise through the year as government support measures set in place due to the COVID-19 crisis are wound down.

Drugmaker AstraZeneca (NASDAQ:AZN) Plc shed 1.4%, as it told the European Union it expects to deliver less than half the COVID-19 vaccines it was contracted to supply in the second quarter.

Consumer goods maker Reckitt Benckiser slipped 0.1% even as it capped 2020 with the strongest sales in its history, while Aviva (LON:AV) slid 0.4% as it agreed to sell its 40% stake in a joint venture in Turkey for 122 million pounds ($173.17 million).