UK’s FTSE 100 hits record high despite weak domestic data; European stocks climb

European markets were in positive territory on Friday, taking London’s FTSE 100 index to a record intraday high and setting regional stocks up for a weekly gain.

The pan-European Stoxx 600 index was 0.6% higher at 10:45 a.m. London time, with most sectors and all major bourses in the green. Mining stocks led the gains, with the sector up 1.5% after Bloomberg reported Glencore had been in talks with Rio Tinto to explore the industry’s largest ever merger.

The U.K.’s mining-heavy FTSE 100 index strengthened 1.1% to surpass a record intraday high above 8,484 points.

The rise came even as investors assessed disappointing U.K. data on Friday, with the ONS estimating December retail sales fell 0.3% on a month-on-month basis. Economists polled by Reuters had anticipated a 0.4% rise in sales volumes from the previous month.

Earlier in the week, U.K. economic growth figures for November came in weaker than expected, while inflation eased more than anticipated to 2.5%.

The combination of all three led traders to add to bets on the extend of Bank of England interest rate cuts this year, with more than 70 basis points in trims priced in by late morning, up from around 65 basis points the previous day.

That in turn placed pressure on the British pound, which was 0.3% lower against the U.S. dollar, but helped with a recent cooling of U.K. borrowing costs, which were broadly lower Friday after spiking to decade-highs last week.

Analysts at Deutsche Bank noted Thursday that U.S. inflation — which this week also came in lower than expected — mattered “just as much if not more” for U.K. assets than domestic inflation.

The FTSE 100 in particular is known for its high proportion of international companies reliant on foreign earnings, with weak U.K. demand having a bigger drag on the FTSE 250 index, which traded just 0.25% higher Friday.

Overnight in Asia, stocks were mixed as investors reacted to China’s fourth-quarter GDP update, which came in above expectations.

On Wall Street, stock futures edged higher, with indexes poised to end the week higher despite some volatility in recent days.

—     CNBC’s Lisa Kailai Han and Lee Ying Shan contributed to this European markets update.