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British mid-caps gain for fourth day as Brexit trade deadline looms

Medha Singh
·2-min read
A man wearing a protective face mask walks past the London Stock Exchange Group building in the City of London financial district, whilst British stocks tumble as investors fear that the coronavirus outbreak could stall the global economy, in London

By Medha Singh

(Reuters) -London's mid-cap index rose for a fourth straight day on Thursday with investors believing the UK and European Union would bridge the gaps to a post-Brexit trade deal, while advertising firm WPP jumped after an upbeat sales forecast.

The domestically focussed FTSE 250 gained 1% as the European Union's chief negotiator said progress had been made.

The Bank of England said it was ready to tolerate an inflation spike in the event of a trade deal not being reached but kept its stimulus unchanged.

"The (Monetary Policy) Committee continues to assume that a free trade deal will be agreed and ratified in time for it to come into effect immediately after the transition period ends on 31 December," said Daniel Vernazza, chief international economist at UniCredit Bank in London.

"While progress has been made in the negotiations and we continue to expect a deal to be done before year-end, there is no white smoke yet."

The gridlocked negotiations have made investors anxious about economic growth in 2021 after the COVID-19 pandemic hammered business activity this year. A deal would ensure the goods trade that makes up half of annual EU-UK commerce remains free of tariffs beyond Dec. 31.

The blue-chip FTSE 100 gave up early gains to dip 0.3%, weighed down by losses in consumer staples. Meanwhile, U.S. stock indexes climbed to a peak on optimism about fiscal stimulus. [.N]

WPP, the world's biggest advertising company, rose 4.2% after saying it expected net sales to return to pre-pandemic levels by 2022, a year earlier than expected.

SSP Group, the owner of Upper Crust and Caffe Ritazza snack chains, dropped about 2.7% as it issued a grim sales outlook.

(Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu; Editing by Kirsten Donovan)