U.K. stocks edged higher Tuesday, as continued optimism over U.S. tax cuts helped British blue-chips extend gains and trade at six-week highs.
How markets are moving: The FTSE 100 index UKX, +0.25% rose 0.2% to 7,550.82, with utility and consumer services groups leading advancers. But the health care and tech sectors were in the red. The London benchmark on Monday rose 0.6%, but underperformed stronger gains across Europe SXXP, +0.15% as the pound strengthened against the dollar and other rivals.
The pound GBPUSD, -0.0747% bought $1.3329 on Tuesday, down from $1.3383 late Monday in New York.
What’s moving markets: The Republican-led U.S. House of Representatives on Tuesday will begin voting on a bill aimed at overhauling the country’s tax code, including a reduction in the corporation tax to 21% from 35%. The bill, if passed, would go to the Senate, which could start voting Tuesday or Wednesday.
Fears that the Republicans would struggle to pass their major tax reform bill eased on Friday after holdouts Sens. Bob Corker of Tennessee and Marco Rubio of Florida decided to pledge their support for the bill, sparking optimism the final vote would take place before Christmas.
“Equities are making a move ahead of any successful vote, with Wall Street again at all-time highs. This has even helped formerly rangebound European markets such as the DAX to break out. An early Santa Claus rally perhaps?,” said Richard Perry, market analyst at Hantec Markets, in a note.
Stock movers: British American Tobacco PLC BATS, +0.87% BTI, +1.35% rose 0.9%, with Berenberg raising its price target on the company by 3% to £57.20 a share as it expects a reduction in the U.S. corporation tax rate to result in higher earnings for BAT.
Old Mutual PLC shares OML, +4.13% jumped 4%, trading at the top of the FTSE 100, after the financial services firm said it will sell its single-strategy asset-management unit for £600 million ($801.8 million) to private-equity company TA Associates.
Decliners on the FTSE were led by Associated British Foods PLC ABF, -2.24% and Mediclinic International MDC, -3.62% , as shares fell 2.3% and 4%, respectively.