Theresa May's resignation timetable barely moves UK stocks but Brexit risk lurks

FTSE 100 up 0.7% and FTSE 250 up 0.5%

Theresa May's tearful resignation followed 14 consecutive days of lower closings between the US dollar and British pound. Bloomberg

Britain's FTSE 100 held its gains on Friday after Prime Minister Theresa May announced her resignation date in a widely expected move which nevertheless raises the prospect of a successor likely to seek a more hardline Brexit divorce deal.

The FTSE 100 was up 0.7 per cent by 1100 GMT and the midcap index rose 0.4 per cent, slightly off its opening levels, as traders and investors said the market had already priced in May's resignation when rumours first started circulating.

Housebuilders, which are considered prone to any hit to the economy from a chaotic no-deal Brexit, barely budged after Ms May's speech.

"It's been so well-flagged and UK assets have been hammered all week. Realistically we know no more or less than we did yesterday," said a trader.

Housebuilders, retailers, domestic banks and other Brexit-sensitive stocks fell sharply earlier this week when pressure grew on Ms May and investors grappled with the likelihood of Boris Johnson, who wants a tougher divorce deal, as her successor.

The former foreign secretary is favourite to win the Conservative party leadership contest, according to Oddschecker.

"Theresa May's announcement ... comes as no surprise, but it could lead to a chain reaction that will ultimately be negative for UK market sentiment," said Seema Shah, senior global investment strategist at Principal Global Investors.

"At this stage the extreme results of either no deal or no Brexit seem more likely than a negotiated managed Brexit."

Risk appetite more broadly returned to markets after US President Donald Trump predicted a swift end to the trade dispute with China.

Oil majors BP and Shell were the biggest boosts to the main index following gains in crude prices, while miners broke a four-day losing streak after copper prices rebounded as the dollar dipped.

Broadcaster ITV topped the FTSE 100 in early deals but its gains faded to just 0.7 per cent by 1045 GMT, after it signed a deal with the English Football Association that will make FA Cup matches entirely free-to-air to viewers from the 2021-22 season.

Mothercare was a standout gainer, up 11.3 per cent and on course for its best day in nine months after its annual report showed restructuring efforts were paying off.

Concern over a potential no-deal Brexit, along with an escalation in the trade war between Washington and Beijing, have left the FTSE 100 on course for its first monthly drop this year.