Mining stocks lifted London’s blue-chip index on Friday as investors raised their bets of a hefty US interest rate cut next week, but gains were limited as a strong pound weighed on export-oriented companies.
The FTSE 100 edged up 0.2%, while the mid-cap FTSE 250 firmed 0.4%, aiming for its first weekly gain in three.
Precious metal miners Fresnillo, Endeavour and Centamin firmed about 2% each as gold scaled a record high against a weaker greenback.
Industrial metal miners rose 0.9% as copper prices rose to a two-week high on expectations of fiscal support from in top consumer China.
The sterling touched a one-week high against the US dollar after the Wall Street Journal and the Financial Times reported it might be a close call on whether the US Federal Reserve cuts rates by 25 basis points or by 50 bps at its meeting next Wednesday.
That prompted traders to boost their expectations of a steeper 50 bps rate cut to 43% from just 14% a day earlier, according to CME’s FedWatch tool.
An influential former New York Fed President, Bill Dudley, later said, “there’s a strong case for 50”.
FTSE 100 falls as AstraZeneca weighs; slowing wage growth cements rate cut bets
Investors are also gearing up for the Bank of England’s policy meeting next week, at which it is expected to stand pay, according to all 65 economists in a Reuters poll.
The BoE meeting, however, will be parsed for clues about future moves as well as a decision over the pace of its bond sales – a hot political topic.
The central bank last month eased interest rates by 25 bps to 5% from a 16-year high.
Among other stocks, Vodafone’s $19 billion merger with Three UK could push up bills for millions of mobile customers, Britain’s competition regulator said.
Vodafone shares rose 0.2%.
Flutter Entertainment edged lower after the Irish betting giant said it will buy a 56% stake in NSX Group, the operator of Brazilian gaming group Betnacional, for about $350 million.
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