The Market Close – UK100 sent lower by Carney comments as pound spikes

European and U.K. shares pared losses after comments by Eurosystem officials damped speculation that Mario Draghi had turned more hawkish.

The pound jumped nearly 1% after the Governor of the Bank of England suggested that interest rates could rise if business investment grows. Sterling rose to $1.2936 against the dollar after Mark Carney said that “some removal of monetary stimulus is likely to become necessary”. He said a change would depend on whether company investment could offset a slowdown in consumer spending. Mr Carney said it is an issue the Bank “will debate in the coming months”.

Tesco plans to cut 1,200 jobs at its head office as part of a major cost-cutting drive. The UK’s biggest supermarket told staff on about the cull, which amounts to a quarter of its workforce in Welwyn Garden City and Hatfield. Tesco is implementing a turnaround plan that aims to reduce costs by £1.5bn. The cuts come after the retailer said last week it would close a call centre in Cardiff at the cost of 1,200 roles. Tesco said it was a “significant next step” in the reorganisation of the company.

The Co-operative Bank said it has agreed the terms of a £700m capital raise by way of a debt-for-equity swap with an ad-hoc committee of its creditors. The proposal will see existing institutional shareholders and holders of the bank’s notes invited to participate in a £250m equity raise in exchange for a 68% stake in the pro-forma ordinary shares of a new holding company for the bank. US hedge funds are currently the Co-Op Bank’s primary shareholders and holders of its debt. The lender, part of the Co-op Group, put itself up for sale in February, after admitting it would not be able to meet regulatory capital targets before 2020.

GlaxoSmithKline said it has submitted a regulatory application for approval of its mepolizumab product to the US Food & Drug Administration. The company is seeking approval of mepolizumab as an add-on therapy to corticosteroids for the treatment of adult patients with Eosinophilic Granulomatosis with Polyangiitis – a rare disease characterised by inflammation in blood vessel wells which can lead to tissue and organ damage. “If approved, mepolizumab will be the first treatment in the US indicated for EGPA and has the potential to offer healthcare professionals and patients a new treatment option to help improve symptoms and disease control,” added Volck. The application is based on a 52-week Phase III study evaluating mepolizumab against a placebo as an add-on therapy in patients with relapsing and/or refractory EGPA.

Pending home sales in the US unexpectedly decreased for the third consecutive month in May, according to a report released by the National Association of Realtors. NAR said its pending home sales index fell by 0.8% to 108.5 in May from a downwardly revised 109.4 in April. Economists had expected the index to climb by 0.8%. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. “Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales,” said NAR chief economist Lawrence Yun.

Oil prices climbed to their highest in more than a week despite a surprise build in crude inventories, as buyers were encouraged by a small weekly decrease in U.S. production.

Gold prices edged higher, finding modest support as the dollar weakened, though rising Treasury yields served to cap the metal’s upside.