UK shares rise on travel, banking boost; retail sales data eases taper fears

British retail sales dropped 0.9% on the month in August versus Reuters poll for a rise of 0.5%. Travel and leisure shares gained 1.3% as Britain was set to consider easing England's COVID-19 rules for international travel after the travel industry complained that a myriad of onerous rules and red tape were hobbling airlines, holiday and tourism companies.

UK shares climbed on Friday, lifted by banks and travel stocks, as concerns about a sooner-than-expected policy tightening by the Bank of England eased after British retail sales fell unexpectedly in August. The blue-chip FTSE 100 index rose 0.6%, with banking shares gaining after a series of brokerage upgrades and price target hikes.

Lloyds Banking Group and Natwest Group climbed 1.2% each after Deutsche Bank raised price targets on the lenders' stocks. Asia-focused banks HSBC Holdings and Standard Chartered jumped after Barclays lifted price targets on their stocks. RBC also upgraded HSBC to "outperform" from "sector perform".

The domestically focused mid-cap FTSE 250 index advanced 0.3%. British retail sales dropped 0.9% on the month in August versus Reuters poll for a rise of 0.5%.

Travel and leisure shares gained 1.3% as Britain was set to consider easing England's COVID-19 rules for international travel after the travel industry complained that a myriad of onerous rules and red tape were hobbling airlines, holiday, and tourism companies. Airlines EasyJet, Wizz Air, Ryanair Holdings, and British Airways owner IAG, were up between 0.9% and 3.6%.