LONDON: A rally in banks and consumer stocks saw London’s FTSE 100 reverse session losses on Thursday, moving in line with other European peers as investors scaled back bets of interest rate hikes by the European Central Bank.
The blue-chip FTSE 100 rose 0.5% after having declined up to 0.4% earlier in the session. But the index still broke a five-week gaining streak on inflation and growth worries and uncertainty stemming from a war in Ukraine.
“UK stocks are tracking the European stocks after (ECB President Christine) Lagarde wasn’t as hawkish as the market was expecting,” said Stuart Cole, head macro economist at Equiti Capital.
The ECB concluded its latest meeting with cautious steps to unwind support and President Christine Lagarde said they would start raising interest rates only “some time” after it has ended its net asset purchases.
“She’s filled the final piece of the jigsaw puzzle in that as much as you’ve got a hawkish Fed, you’ve got on this side of the Atlantic both the Bank of England and the ECB, very much alluding to the fact that growth concerns going forward are going to take priority over putting the inflation genie back in the bottle.”
“So outlook for stock markets this side of the pond suddenly look brighter than it was.” The banks index rose 1%, while consumer stocks such as Diageo, Compass Group and Reckitt Benckiser were among other boosts to the blue-chips index, up between 08% and 2.3% The domestically focused midcap FTSE 250 index snapped a three-session losing streak to close 0.7% higher. Wizz Air rose 7.7% after saying summer bookings were expected to improve significantly after Easter.