UK’s FTSE 100 kicks off week on cautious note; Melrose shines

By Shubham Batra and Johann M Cherian

(Reuters) -The UK’s FTSE 100 closed Monday’s session flat as investors awaited key economic data to assess the strength of the local economy, while Melrose Industries hit a one-month high after signing a deal with GE Aerospace.

UK GDP data is in focus this week and is expected to show a contraction of 0.1% on a monthly basis in September, compared with growth of 0.2% a month ago, according to a Reuters poll.

“The headwinds to growth are growing increasingly strong,” said Stuart Cole, chief macro economist at Equiti Capital.

Cole added that the economy could easily contract in the first half of next year as the Bank of England’s monetary policy tightening begins to take full effect.

The commodity-heavy FTSE 100 closed a choppy session unchanged, though shares of real estate investment trusts dropped 3.3% after the index tracking real estate stocks rose sharply last week.

The aerospace and defence sector gained 0.3%, underpinned by a 3.5% jump in shares of Melrose Industries after the aerospace supplier said its GKN Aerospace Engines business expanded its partnership with GE Aerospace.

Meanwhile, the mid-cap FTSE 250 slid 1.3%, snapping six-straight days of gains, its longest winning streak since April.

Both the FTSE indexes got a boost towards the end of the previous week as investors remained optimistic that the Bank of England and the U.S. Federal Reserve were done with monetary tightening.

Among other movers, Hipgnosis Songs Fund, which had been undertaking a review of its financial position, declined 1.9% after it said it would not declare dividends before its new fiscal year to ensure sufficient cash resources.

EasyJet and Wizz Air added 1.2% and 0.8%, respectively, after Ryanair forecast a record annual profit and promised a regular dividend payment.

Later in the week, investors will also monitor commentary from a slew of UK central bank officials and parse other economic data such as housing prices, construction and services activity for October.

(Reporting by Shubham Batra and Johann M Cherian in Bengaluru; Editing by Varun H K, Eileen Soreng and Sharon Singleton)