London shares, pound shine despite darker growth outlook

The London stock market firmed Wednesday despite Britain chopping its growth forecasts over Brexit, while Frankfurt fell on the continued political uncertainty in Germany. US equities finished mixed, with the Nasdaq edging to a fresh record, while the dollar retreated after Federal Reserve meeting minutes highlighted persistently low inflation. The British capital's benchmark FTSE 100 closed the day up 0.1 percent after finance minister Philip Hammond's unveiled the Conservative government's tax and spending plans. While the deficit is set to come in at £49 billion in the fiscal year that runs through to April, some £8 billion less than previously thought, the growth outlook was revised down through 2021 thanks to Brexit. The pound initially fell, but later recovered and rose against the dollar, while the gains on London's FTSE 100 index accelerated before gains faded away in late trading. "Perhaps the big surprise was that the pound didn't suffer more as a result of the abysmal growth and productivity forecasts," Chris Beauchamp, Chief Market Analyst at online trading firm IG. - Dollar retreats - The dollar was for its part hobbled by data showing a drop in durable goods orders when the market had been expecting a gain. The greenback fell further following Fed meeting minutes that suggested the central bank would lift interest rates in December, but also spotlighted worries about persistently low inflation and concerns by some policy makers over "elevated asset valuations." "While there were both hawkish and dovish elements in the FOMC minutes, clear concerns about persistently low inflation and the possibility of a financial market reversal skewed the tone towards the dovish side," said James Chen on Forex.com. "Although markets continue to see a December rate hike from the Fed almost as a foregone conclusion, there is much less confidence about the pace of monetary policy tightening in 2018 given the Fed's ongoing concerns." The Nasdaq inched to a fresh record for the second day in a row, while the Dow and S&P 500 both declined. Elsewhere in Europe, Frankfurt's DAX 30 index dropped 1.2 percent amid continued uncertainty over how a ruling coalition will come together. Pressure mounted Wednesday on Germany's Social Democrat leader Martin Schulz to reconsider an alliance with Chancellor Angela Merkel's conservatives to stop Europe's biggest economy from sinking into months of paralysis. Schulz has repeatedly said the SPD would not return as the junior coalition partner in a government led by Merkel, after suffering a stinging defeat in September's general election. Frankfurt stocks sank "presumably due to the lack of political progress in Germany," noted Spreadex analyst Connor Campbell. Oil prices ended solidly higher after data showed US oil inventories fell last week. - Key figures around 2200 GMT - New York - DOW: DOWN 0.3 percent at 23,526.18 (close) New York - S&P 500: DOWN 0.1 percent at 2,597.08 (close) New York - Nasdaq: UP 0.1 percent at 6,867.36 (close) London - FTSE 100: UP 0.1 percent at 7,419.02 points (close) Frankfurt - DAX 30: DOWN 1.2 percent at 13,015.04 (close) Paris - CAC 40: DOWN 0.3 percent at 5,352.76 (close) EURO STOXX 50: DOWN 0.4 percent at 3,563.46 Tokyo - Nikkei 225: UP 0.5 percent at 22,523.15 (close) Hong Kong - Hang Seng: UP 0.6 percent at 30,003.49 (close) Shanghai - Composite: UP 0.6 percent at 3430.46 (close) Euro/dollar: UP at $1.1824 from $1.1740 at 2200 GMT Pound/dollar: UP at $1.3326 from $1.3244 Dollar/yen: DOWN at 111.18 yen from 112.44 yen Oil - Brent North Sea: UP 75 cents at $63.32 per barrel Oil - West Texas Intermediate: UP $1.19 at $58.02 per barrel burs-jmb/ia