By Sara Sjolin, MarketWatch
U.K. traders returned from the Christmas holidays in an upbeat mood on Wednesday, sending the benchmark stock index higher and scoring a record close.
What is the market doing: The FTSE 100 index rose 0.4% to close at 7,620.68, rebounding from a 0.2% loss on Friday, which was the last trading session before Christmas.
With Wednesday's advance, the London blue-chip index has taken out its previous all-time closing high reached on Thursday at 7,603.98.
The pound rose to $1.3395 from $1.3374 late Tuesday in New York.
What's driving the market: Analysts said the general end-of-year portfolio rebalancing was now kicking in, which could drive trade for the rest of the week.
Mining firms also help to lift the FTSE, tracking positive moves for most metals prices. Copper rose for a 15 straight session, trading 0.2% higher.
Stock movers: Among miners, shares of Fresnillo PLC (>> Fresnillo) rose 3.5%, Randgold Resources Ltd. (>> Randgold Resources) (>> Randgold Resources) climbed 1.9% and Glencore PLC (>> Glencore) added 2.1%.
Shares of Royal Dutch Shell PLC (>> Royal Dutch Shell Plc) (>> Royal Dutch Shell Plc) gained 0.7% after the oil major said the potential impact from the U.S. tax reform will be favorable to the group. The company also said it expects a charge to its fourth-quarter earnings of $2 billion to $2.5 billion following the changes to in the U.S.
In the same vein, Barclays PLC (>> Barclays PLC) (>> Barclays PLC) said it expects to book a 1 billion pound ($1.3 billion) charge to its 2017 accounts following the changes in the U.S., which will also reduce its Core Equity Tier 1 ratio by 20 basis points. Barclays shares closed 0.3% higher on Wednesday.
The reason European companies are taking hits from the tax reform stateside is because of the adjustment in their deferred taxes, market participants said. Companies can log deferred tax assets during loss-making quarters and then use them to offset future tax payments, essentially working as tax credits in the U.S. However, those assets will be worth less on paper when the tax reform comes into effect and as the headline corporate tax rate falls to 21% from 35%.
Outside the FTSE 100 index, shares of IWG PLC (>> IWG - International Workplace Group) rallied 27% after the global workplace provider said it has received an indicative offer proposal from funds managed by affiliates of Brookfield Asset Management Inc. (>> Brookfield Asset Management) and Onex Corp. (ONEX.T).