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UK Stock Market’s Valuation Discount Is Shrinking Quickly

Converging valuations in the UK and the euro area are making the FTSE 100 Index less attractive compared to last year. Spurred by commodities sectors, the FTSE 100 has solidly outperformed peers this year with a 2% gain, compared with a 14% drop for the more domestically focused FTSE 250 and a 13% decline in the euro-area gauge Euro Stoxx 50. Strategists surveyed by Bloomberg see no more upside left this year for the index, while they forecast 9% gains for the Euro Stoxx 50.