A decline in oil prices sent U.K. stocks lower for a second day, trimming the FTSE 100 Index’s best weekly gain since October.
The benchmark lost 0.4 percent at the close in London, wiping out an earlier rise of as much as 0.5 percent. Royal Dutch Shell Plc dropped 1.7 percent, dragging energy shares lower. Banks also fell, with Standard Chartered Plc and Royal Bank of Scotland Group Plc down 1.7 percent or more.
Still, this week’s rally of 4.3 percent has extended a rebound for U.K. stocks after an earlier miner-led slump at the start of the year, making them the best performers in western Europe in 2016.
And the weakening of the pound doesn’t hurt, according to Geoffrey Yu, an investment strategist at UBS Group AG’s wealth-management unit.
“We’ve reduced our underweight U.K. equities even though the temperature regarding fears of an exit are rising,” Yu , said on Bloomberg Television. “Look at the pound, look at where it is. Last year the pound was a significant headwind for U.K. corporate earnings. Now, while its too early to talk about a tailwind, it’s clearly no longer a headwind.”
The FTSE All-Share Index and Ireland’s ISEQ Index fell 0.3 percent today.