Melrose lifts FTSE 100 ahead of Sunak's spending plan announcement

London's FTSE 100 rose on Wednesday, buoyed by Melrose Industries after it gave an upbeat trading update, with investors awaiting Britain's one-year spending plan announcement later in the day.

The blue-chip index edged 0.1pc higher, with turnaround specialist Melrose Industries Plc jumping 3.6pc after saying it is currently trading at the top end of the board's expectations for 2020.

A slightly weaker pound also boosted shares of big dollar-earning consumer staple companies such as British American Tobacco Plc, Diageo Plc and Unilever Plc.

Diageo Plc also rose after Credit Suisse upgraded the stock's rating to outperform and raised its target price.

Finance minister Rishi Sunak is set to announce extra investment to ease a backlog in the health system, counter a surge in unemployment and build new infrastructure in a Spending Review due to parliament around 1230 GMT.

"This is just a one-year review for 2021-22, but it will be interesting to see what the long-term fiscal picture looks like as well as the extent of tightening pencilled in for the year ahead," Deutsche Bank Strategist Jim Reid said in a note.

Britain's budget deficit is set to reach around 20pc of the GDP and its economy is on course for a record crash this year, but the FTSE 100 index rallied more than 15pc this month on hopes of a speedy economic recovery based on positive vaccines data.

The domestically focused mid-cap FTSE 250 index, considered a barometer for Brexit sentiment, fell 0.5pc after the European Commission's chief said she cannot guarantee there will be a trade pact with Britain and the coming days will be crucial, adding the bloc was prepared for a no-deal.

Roadside recovery company AA Plc jumped 7.2pc after it agreed a sale to private equity groups that values the company at 219 million pounds.

Virgin Money UK Plc slipped 6.2pc after the lender posted a 77pc drop in annual underlying pre-tax profit.