Britain's main stock index and the mid-cap benchmark scaled new peaks on Friday, lifted by a wave of gains across equities worldwide, while a sharp fall in UK car sales hit some motor dealers and insurance stocks. The FTSE 100 closed 0.4 percent higher at 7724.22 points after hitting a record of 7,727.7 around mid-session, boosted by miners, utilities and consumer staples stocks. Mid-caps in the FTSE 250 index also touched a new record, up 0.5 percent.
Still, the British market lagged bigger moves in European stocks after impressive economic data for the euro zone. "The UK stock market and UK economy are quite starkly different," said Edward Park, investment director at Brooks Macdonald, adding that he continued to expect lower equity returns from Britain than European and US stocks.
Analysts have, however, begun turning more optimistic on FTSE 100 companies' earnings, revising up their estimates in the past two weeks as a commodities rally pushed the index higher. Centrica and United Utilities led the leaderboard after Credit Suisse upgraded both stocks, revising up its view on the sector.
Analysts at the Swiss bank said the worst case for UK domestic energy suppliers was now priced in, and the stocks carried large risk discounts. Motor insurers were the main laggards after car sales data showed the sharpest fall in new car registrations since 2009.
Admiral sank 2.9 percent to the bottom of the FTSE. Admiral was doubly hit by both the car sales data and a downgrade to "underweight" from JP Morgan.
A Mediobanca analyst said Admiral was heavily exposed to the UK car market, with nearly 100 percent of profits made domestically. Some small-caps were also hit by the weaker sales data, with auto retailer Pendragon down 1.6 percent and Autotrader falling 0.5 percent.
Mid-cap stocks were helped to their record by strong industrials and tech shares. The more domestically focused stocks were shunned by investors after Brexit but some were being tempted back by lower valuations. "A lot of the domestic UK market has started to price in a weak economic outlook. We find some interest there to be honest," said John Surplice, pan-European fund manager at Invesco Perpetual.
"We have reflected that in our portfolio and got a bit more domestic UK exposure - but as a responsible pan-European investor you see the merits of some domestic UK stocks but you don't want to go overboard on it," he added.