UK shares were set to snap a three-day losing streak on Thursday as the pullback in U.S. bond yields and the dollar boost investor sentiment, although shares of Metro Bank slumped on reports of an urgent capital raise.
The benchmark FTSE 100 index gained 0.3% and the domestically-focused FTSE 250 index rose 0.7%, rebounding from near one-year lows hit in the previous session.
Long-term U.S. government yields eased from 16-year highs while the U.S. dollar softened after data showed that U.S. jobs growth was below economists’ expectations in September, relieving investor anxiety.
“I don’t think we will see sharp falls or renewed appetite for long-dated debt anytime soon because investors still have a critical eye on high levels of U.S. federal spending,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Metro Bank’s shares tumbled 24.8% and hit a record low on reports the British mid-sized lender was in talks for an urgent capital raise of as much as 600 million pounds ($728 million).
Metro Bank confirmed it was evaluating options, including a potential fundraising. Its shares were also briefly suspended in frantic trading.
A fall in copper prices for the fourth day due to inventories dragged down industrial metal miners by 0.2%.
However, the market was mostly higher.
Construction and materials stocks led sectoral gains, adding 1.8% after shares of ventilation products supplier Volution Group rose 10.8% on higher annual revenue.
Among individual stocks, Imperial Brands gained 1.6% after the cigarette maker announced a $1.34 bln share buyback programme and reaffirmed its annual forecast.
Ferrexpo shares climbed 2.4% after the Ukraine-focused producer of premium iron ore pellets posted a 17% spike in total third-quarter production.
Tesco shares rose 2.7% to the top of the FTSE 100 after multiple brokerages raised their target price on the retailer.
Meanwhile, industry data showed new car sales in Britain rose about 20% in September, driven on an increase in registrations by fleets.
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