By Carla Mozee and Sara Sjolin, MarketWatch

U.K. construction output at strongest in five months

U.K. blue-chip stocks pushed higher Monday, with bank shares taking part in broad-based gains seen as being set off by the passage of a tax overhaul package in the U.S. Senate.

Meanwhile, the pound was sent on a roller-coaster ride after the U.K. and EU failed to reach an agreement on key Brexit issues at a lunch in Brussels, although they said progress has been made.

What markets are doing: The FTSE 100 index ended 0.5% higher at 7,338.97, partly rebounding from a 1.5% loss from last week.

The pound made big swings during the day, trading as high as $1.3539 and as low as $1.3414. Sterling traded at $1.3475 at the time of the London market close, down from $1.3478 late Friday in New York. Against the euro, sterling bought EUR1.1364, more than EUR1.1330 on Friday.

What's moving markets: The pound traded firmly higher early in the day following reports that an agreement on avoiding a post-Brexit hard border between the Republic of Ireland and Northern Ireland was getting close ahead of a key meeting between U.K. Prime Minister Theresa May and European Commission President Jean-Claude Juncker in Brussels. The Irish border is one of the three issues London needs to make "sufficient progress" on in order for the EU to move Brexit talks along to trade and a potential transition period.

However, the pound pulled back in the afternoon after May and Juncker said they hadn't been able to reach an agreement as two or three issues are still undecided.

"But we will reconvene before the end of the week and I am also confident that we will conclude this positively," May said after the meeting in Brussels.

Meanwhile in the stock market, U.K. and European equities started the week in rally mode, rising alongside sharp gains for U.S. stocks (http://www.marketwatch.com/story/dow-futures-soar-200-points-as-markets-get-ready-to-rally-on-tax-plan-progress-2017-12-04) after the U.S. Senate passed the Republican-sponsored tax reform proposal (http://www.marketwatch.com/story/senate-passes-tax-bill-advancing-top-republican-priority-2017-12-02) almost entirely along party lines on Saturday.

The Senate move increases chances that proposed tax changes will signed into law by President Donald Trump. That would fulfill long-running anticipation in markets over the past year that the Trump administration would usher in what Republicans have touted as business-friendly tax changes. The House and Senate now must agree on a single tax bill before it can be sent to Trump to sign.

Read:Trump celebrates tax-bill victory as opponents vent their fury via #TaxScamBill (http://www.marketwatch.com/story/trump-celebrates-tax-bill-victory-as-opponents-vent-their-fury-via-taxscambill-2017-12-02)

Read:U.K., EU move closer to breakthrough in Brexit talks (http://www.marketwatch.com/story/uk-eu-move-closer-to-breakthrough-in-brexit-talks-2017-12-04)

What strategists are saying: "A day of rumors, claims and counterclaims has left U.K. investors reeling. As the session winds down in London it looks like, contrary to previous reports, that there will not be a deal between the U.K. and the EU," said Chris Beauchamp, chief market analyst at IG, in a note.

"We knew Brexit would never be simple, but just how complicated it would be is still a surprise," he added.

Stock movers: Bank shares world-wide have been pushed higher throughout the past year on expectations of lower taxes in the U.S. Many overseas banks have business interests in the U.S.

In London, shares of Barclays PLC (BCS) (BCS) popped up 2.6%, Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) put on 1.5%, and Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) ended up 1%. HSBC Holdings PLC (HSBA.LN) (HSBA.LN) picked up 0.4% and Standard Chartered PLC (STAN.LN) tacked on 0.6%.

Meanwhile, Sky PLC (SKY.LN) rose 2.8% on reports that there's been a restart in talks by Sky stakeholder 21st Century Fox Inc. (FOX) (FOX) for the potential sale of some of its assets to Walt Disney Co. (DIS). Those assets could include Sky.

Building higher: House builder shares stayed aloft after IHS Markit/CIPS said its construction output PMI for November hit 53.1. The reading, the highest in five months, outstripped the 51.0 consensus estimate from FactSet.

"Once again, resilient house-building growth helped to offset lower volumes of commercial work and civil engineering activity," said Tim Moore, associate director at IHS Markit, in a note.

Shares of Barratt Developments PLC (BDEV.LN) finished 0.9% higher, Persimmon (PSN.LN) gained 0.6% and Taylor Wimpey PLC (TW.LN) moved 1% higher. Berkeley Group Holdings PLC (BKG.LN) rose 0.9%.

"Construction firms reported that heightened economic and political uncertainty continued to hold back commercial development activity," said Moore.

 

(END) Dow Jones Newswires

December 04, 2017 13:00 ET (18:00 GMT)

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