The FTSE 100 has reached a new closing high after an impasse in the latest round of Brexit talks triggered a sell-off of the pound.
The stock market made up of the UK’s biggest companies closed up 22 points (0.3%) at 7556.24.
The rise reflected the weaker pound, which makes British goods and services cheaper abroad and tends to increase the share price of multinational companies with a large proportion of foreign earnings.
At one point, the pound was down as much as one cent against the dollar at $1.3123, after the EU’s chief Brexit negotiator, Michel Barnier, said talks over Britain’s divorce bill were in a “very disturbing state of deadlock”.
Currency traders reacted swiftly to the lack of progress, also sending sterling down to a four-week low against the euro at €1.109, although the pound later recovered after markets closed.
Multinational exporters were among the FTSE 100’s biggest risers on Thursday, with Burberry gaining 2.7% and Unilever up 2.1%.
Energy companies also helped push the index to the record closing high. SSE and Centrica, two of Britain’s biggest providers, gained 2.5% and 1.9% respectively after it emerged that the government’s price cap was unlikely to come into effect until 2019.
Analysts said the high on Thursday was not a vote of confidence in the UK economy.
“The bullish move was achieved for the wrong reasons, as the dip in the pound on the back of the stalled Brexit talks helped the British index,” said David Madden of CMC Markets.
Joshua Mahony, a market analyst at IG, said: “The continued ascent of the FTSE has had much to do with the negative effect of the disjointed Brexit negotiations, with daily updates seemingly highlighting just how unsuccessful the initial rounds of talks have been.”
The FTSE’s showing beat its previous closing high of 7,547 points in June, but was below the record intraday high of 7,598.99.
Laith Khalaf, a senior analyst at the financial services group Hargreaves Lansdown, said: “The UK stock market continues its winning streak despite concerns over economic performance and the unfolding Brexit process. The question is whether the market’s strong run means it’s fit to burst.
“Factoring in earnings, from where we’re sitting, valuations in the UK stock market look reasonable, neither particularly cheap nor particularly expensive. That means in the short term the stock market can turn in either direction without defying the laws of statistics.”