Britain's FTSE 100 closed higher for the fourth straight session on Friday as signs the United States and China could soon settle their protracted trade dispute offset disappointing data from China, while TalkTalk sank after warning rising costs would hit its earnings. The FTSE 100 closed up 0.7 percent, posting its best week since December 2016, and the more domestically-focussed FTSE 250 closed 0.5 percent higher, outperforming European stocks.
"This week's dovish turn from the Federal Reserve, reinforcing the change of tone from various policymakers through January has helped to increase confidence about the prospect for further gains in the days and weeks ahead," said CMC Markets analyst Michael Hewson.
Markets got a boost when US President Donald Trump said he would meet Chinese President Xi Jinping soon to try to seal a comprehensive trade deal and the top US negotiator reported "substantial progress" in two days of high-level talks. "Though the details of what happens next are still unclear... the overall tone from the January-ending trade talks was one of cautious optimism," said Spreadex analyst Connor Campbell.
Data showing China's factory activity shrank by the most in almost three years in January kept gains muted early on, but a stronger-than-expected US job growth report for January provided a shot-in-the-arm for the main index.
Data at home signalled continuing concerns from Brexit uncertainty, as British factories stockpiled goods in January at the fastest rate since the early 1990s as they brace for a potentially chaotic divorce from the European Union.
Banks and mining shares were among the biggest boosts to the FTSE 100 as the trade deal signals helped the sectors most sensitive to the global economy. Dollar-earners also gained as weak UK factory data pushed sterling lower.
Burberry, among the most exposed to China, also rose 1.7 percent.
Gold prices fell as investors sought riskier assets, leading Fresnillo down 3.4 percent to the bottom of the main index. It was one of only 12 blue-chip stocks in the red.
TalkTalk shares ended 4.7 percent lower after hitting a more than 7-month low as the broadband firm said full-year earnings would fall short of expectations due to higher costs from attracting more customers and changing its accounting standard.
Glencore edged 1.1 percent lower after Katanga Mining said the Democratic Republic of Congo asked it to suspend a project. Glencore owns a majority stake in Katanga.
Metro Bank, whose stock has halved in value following an accounting error, jumped 10.4 percent on its best day since floating in March 2016 and was the best mid-cap performer.
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