By Julien Ponthus
LONDON (Reuters) - UK shares lagged their European peers on a trade war relief rally on Thursday, after better-than-expected UK retail data boosted the pound which acts as an accounting drag on their foreign revenues.
The FTSE 100 (FTSE) closed up 0.5 percent while the leading euro zone stock index (STOXX50E) jumped 1.1 percent, its best performance in two months.
While analysts had expected a strong spring and summer to come to an end, British shoppers kept up their spending spree in August, despite the end of the World Cup, and showed no sign that the approach of Brexit was making them cautious.
"It was sterling’s retails sales-assisted gains that prevented the FTSE from properly joining in" the worldwide equity rally, said Spreadex analyst Connor Campbell.
A $3.2 billion share buyback program from Rio Tinto (L:RIO) boosted the shares of the miner by around 2.5 percent.
Other companies in the industry such as Fresnillo (L:FRES) or Antofagasta (L:ANTO) also rose in roughly the same proportion.
Basic materials and financials were the main sectors contributing to the FTSE's rise.
GVC Holdings (L:GVC) was down 2.8 percent with its shares now trading without entitlement to their latest dividend pay-out.
Shares in Diageo (L:DGE) were up 1.6 percent as it reported in line results despite a hit from foreign exchange movements.
"The year has started well and performance is in line with expectations", Jefferies commented about the world's largest distributor of spirits.
There were sharper moves on small and mid-sized companies.
Lower levels of market volatility hurt quarterly revenues at trading platform IG Group (L:IGG), sending the stock down 9.8 percent.
(Julien Ponthus; Editing by Jon Boyle, Richard Balmforth)