FTSE 100 rises as banks gain; windfall tax threatens public services

Pedestrians leave and enter the London Stock Exchange in London, Britain August 15, 2017. REUTERS/Neil Hall

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  • Serco wins after results
  • Utility stocks under pressure again
  • Banks lead the gains
  • FTSE 100 up 0.6%, FTSE 250 up 1.6%

May 26 (Reuters) – The UK’s main stock index rose on Thursday on banks’ gains, but utility shares fell after Britain announced a one-off 25% tax on producers’ profits of oil and gas.

The blue-chip FTSE 100 (.FTSE) rose 0.6%, with banks (.FTNMX301010) leading the gains with a rise of 1.4%, while the domestically focused FTSE 250 index (. FTMC) increased slightly by 1.6%.

Facing intense political pressure to provide more support to bill payers in the face of what political opponents and campaigners have called a cost of living crisis, UK Finance Minister Rishi Sunak said energy companies were making extraordinary profits while the British struggled. Read more

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Shares of power producers Drax (DRX.L), Centrica (CNA.L) and SSE (SSE.L) fell between 4.5% and 6.6%, while shares of broader utilities ( .FTNMX651020) were down 4.1%.

“The Chancellor appears to have decided not to include the power generation sector in today’s announcement, but in today’s statement the door has been left open for them to be included. later in the year,” said Michael Hewson, chief market analyst at CMC Markets.

Global oil majors BP (BP.L) and Shell, which are less affected by British policy, rose more than 1% as they rebounded from session lows.

“Big oil companies slipped a bit in anticipation of the Chancellor’s no-budget but dusted themselves off fairly quickly as it became clear that with the stick came a pretty big carrot,” said Danni Hewson, financial analyst at AJ Bell.

Shares of BT (BT.L) fell 2.3% after it announced the UK business secretary would launch a national security review of a deal struck by Altice founder Patrick Drahi to increase its 18% stake in BT. Read more

Shares of water company United Utilities (UU.L) fell 6.6% after warning of rising costs due to inflationary pressures.

Asset manager Intermediate Capital Group (ICP.L) jumped 7.6% after reporting its annual results.

Leading the mid-cap index, utility contractor Serco (SRP.L) gained 9.8% as it improved its full-year earnings outlook. Read more

Chemicals maker Johnson Matthey Plc (JMAT.L) fell 3.6% after forecasting 2022-23 operating profit in the lower half of market estimates as supply disruptions from lockdowns coronavirus in China and component sourcing from Ukraine have hurt its automotive customers. Read more

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Reporting by Sruthi Shankar and Amal S in Bengaluru; edited by Uttaresh.V, Sriraj Kalluvila and Paul Simao

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