UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Miners advance after rough week; BAE upgraded

U.K. stocks finished higher Friday,as Federal Reserve Chairwoman Janet Yellen signaled the world's largest economy looks healthy enough to take on another increase in interest rates.

The FTSE 100 rose 0.3% to 6,838.05, but the health care, consumer-goods and consumer-services sectors lost ground. Miners popped up after being under pressure this week.

The blue-chips index started to pick up a bit of steam before the text of Yellen's speech in Jackson Hole, Wyo., was released.

"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal-funds rate has strengthened in recent months," she said in prepared remarks for delivery at the central bank's summer summit.

Equity investors in Britain and across Europe took in stride Yellen's signal of a pending rate hike, as it underscores her view of improving conditions in the world's largest economy, which, in turn, can aid growth worldwide, said Richard Hunter, head of research at Wilson King Investment Management.

"Not to mention that the last thing the Fed is going to do is to raise rates by too much or too quickly, threatening to derail their own economic recovery. The market is coming around to this view, slowly, that there's a positive case as and when the interest-rate hike happens," he said.

Early Friday, a preliminary print of 0.6% growth in Britain's second-quarter gross domestic product was confirmed by the Office for National Statistics, meeting market expectations.

Following Yellen's remarks, the pound briefly spiked up to around $1.3260 before it moved back to $1.3187. Late Thursday, it changed hands at $1.3175.

The yield on the U.K.'s 10-year gilt was down 2 basis points at 0.54%, according to Tradeweb, as prices rose.

The Bank of England earlier this month expanded its QE program and launched other aggressive easing moves aimed at cushioning the British economy in the wake of the Brexit vote in June.

Read:The head of Germany's Deutsche Bank says negative rates are 'fatal' (http://www.marketwatch.com/story/the-head-of-germanys-largest-bank-says-negative-rates-are-fatal-2016-08-25)

Movers: The FTSE 100 on Thursday lost 0.3% (http://www.marketwatch.com/story/ftse-100-struggles-as-miners-drug-makers-pull-lower-2016-08-25), weighed by those losses for miners and for drugmakers.

On Friday, Glencore PLC (GLEN.LN) shares climbed 3.2%. They previously suffered two sessions of heavy declines after the miner posted a half-year loss of $369 million (http://www.marketwatch.com/story/glencore-steps-up-debt-cuts-as-it-swings-to-loss-2016-08-24).

Other mining stocks rose, with Rio Tinto PLC (RIO) (RIO) (RIO) topping the FTSE 100 by rising 3.3%. Antofagasta PLC (ANTO.LN) ended up 2.8% and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) tacked on 3.2%.

But drugmakers were among the worst performers Friday, remaining under pressure in a backlash about drug pricing in the U.S. The furor was spurred by a substantial price hike for Mylan NV's (MYL) EpiPen, an emergency allergy treatment.

Shire PLC (SHPG) (SHPG) and AstraZeneca PLC (AZN.LN) (AZN.LN) each fell 1.1%, and GlaxoSmithKline PLC (GSK.LN)(GSK.LN) lost 0.2%. But Hikma Pharmaceuticals PLC (HIK.LN) picked up 1.5%.

Read:How Hillary Clinton crushed another rally in biotech (http://www.marketwatch.com/story/how-hillary-clinton-crushed-another-rally-in-biotech-2016-08-24)

Elsewhere, brewer SABMiller PLC (SAB.JO) rose 0.3% after Anheuser-Busch InBev NV (ABI.BT) warned its merger with SAB could lead to thousands of job losses (http://www.marketwatch.com/story/ab-inbev-warns-3-to-be-laid-off-in-merger-2016-08-26) in coming years, according to merger-related documents.

Upgrades: The best performance outside of miners was from BAE Systems PLC (BA.LN). Shares rose 2.3% as the defense company's rating was upgraded to buy from hold at Berenberg.

"We anticipate a material order book uplift, an improving cash profile in 2017 (with potential upside to guidance), and a secure progressive dividend across our forecast," wrote Berenberg analyst Charlotte Keyworth in a research note.

On the midcap FTSE 250, Amec Foster Wheeler PLC (AMFW.LN) shares jumped 6.6% after Morgan Stanley lifted its rating on the energy engineering company to overweight from equalweight.

Meanwhile, Ladbrokes PLC (LAD.LN) climbed 3.3% after the betting company's rating was raised to buy from hold at Berenberg.

The FTSE 250 ended 0.3% higher at 17,930.79.

(END) Dow Jones Newswires

August 26, 2016 12:14 ET (16:14 GMT)

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