Hopes for a Brexit compromise remain as markets close early for Christmas

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Traders who had hoped that an agreement would be reached between the United Kingdom and the European Union in the hours of a shortened trading session on Christmas Eve – when markets closed at 12:30 p.m. – have been disappointed.

On a positive note, the FTSE-100 started the half-day session, opening up 0.43 percent, but fell back as the day progressed, finishing the session with just 6.36 points, or 0.1 percent, at 6502.11.

In comparison, the UK-focused FTSE Mid 250 Index, which closed 248.92 points, or 1.23 percent, at 20546.68, had better news.

After reaching a three-week low on Monday, the second-tier index posted a 5.8 percent rise.

The outstanding performer, however, was the pound, which has seen a steady increase since Monday against the dollar and was on the verge of hitting a high not seen since May 2018.

However, until the results of the EU referendum, it remains far from the levels around $1.50 at which it traded on June 23, 2016.

Since Monday’s lows, when the pound dropped to $1,320, on Thursday morning it grew as high as $1,3612 – a rise of 3.12 percent.

The pound was up 0.61 percent against the dollar as markets closed Thursday, trading around $1,357. At EUR 1,113, the pound also increased by 0.5 percent against the euro.

Traders were also waiting for news on a post-Brexit trade agreement at the close of trading.

David Madden, market analyst at CMC Markets UK, said, “In recent weeks and months, the pound has seen a lot of volatility as uncertainty over the future UK trade relationship with the EU has affected the currency.”

“The pound was avoided by some traders because there was no clarification on the EU situation.

“There has been a lot of talk this morning that a deal will be announced, and that has boosted the pound. Sterling is up 0.7 percent against the U.S. dollar and at one point in the session was within a hair’s breadth of a new 31-month high against the U.S. dollar.”

As London closed, the French CAC-40 was flat. There were closed German markets.

Optimism that a no-deal Brexit could be avoided helped to post some of the highest price increases for banks, supermarkets and housing associations.

In the FTSE-100, Lloyds Banking Group was the largest gain, closing 3.99 percent, or 1.48 pence, at 38.605 pence, while rival Barclays closed 2.78 pence at 154.6 pence and Natwest Group closed 2.05 pence at 168.95 pence.

At 232.9 pence, Tesco closed 6.7 pence, or 2.96%, higher, Morrisons increased 2.45 pence to 176.3 pence, and Sainsbury added 2.7 pence to 226.7 pence.

Property businesses were also up, including Barratt Acquisitions, Berkeley Community, Persimmon and Land Securities.

Rio Tinto said it had “a lot of work to do” overnight, as the Anglo-Australian miner said it had started to restore ties with the indigenous owners of the sacred caves that it demolished in Western Australia’s Pilbara area in May.

Ivan Vella, acting chief executive of Rio Tinto Iron Ore, said, “We know we have a lot of work ahead of us to restore confidence in our company,”

Because of the fiasco, the former chief executive quit the firm. At 5,574 pence, shares closed down 26 pence.

Rival Anglo-Australian miner BHP said it is close to resuming work at a Brazilian mine where an accident in 2015 killed 19 workers.

The company expects to manufacture approximately eight million tons of iron ore pellets at the Germano Mine and its Ubu Complex next year. At 1,964.4 pence, shares closed down 1.6 pence.

Lloyds Banking Group, up 1.48 pence at 38.605 pence; Melrose, up 6.05 pence at 178.95 pence; Tesco, up 6.7 pence at 232.9 pence; Legal & General, up 6.6 pence at 266.4 pence; and Whitbread, up 76 pence at 3,214 pence, were the biggest winners in the FTSE-100.

Rightmove, down 14.4 pence to 643 pence, Kingfisher, down 4.6 pence to 265.4 pence, Entain, down 18 pence to 1,145.5 pence, Spirax-Sarco, down 175 pence to 11,155 pence, and Flutter, down 205 to 15,045 pence, were the biggest losers.

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