FTSE 100 climbs on energy, banks boost as investors await BoE decision

LONDON: London’s FTSE 100 closed higher on Tuesday on the back of gains in energy and heavyweight financials even as the conflict in the Middle East raged on, while investors awaited the Bank of England’s interest rate decision this week.

The benchmark FTSE 100 closed up 0.83 percent, marking its biggest one-day jump in a week. The mid-cap FTSE 250 added 0.72 percent, snapping a four-session declining streak. Israel said it had killed Iran’s security chief, while a senior Iranian official said the new supreme leader had rejected de-escalation offers conveyed by intermediary countries.

The war entered its third week with no resolution to the conflict or the reopening of the Strait of Hormuz in sight, sending oil prices higher.

The energy sector rose 1.82 percent, trading at a record high. Majors BP and Shell advanced nearly 2 percent each. Heavyweight banks were the biggest boosts to the FTSE 100, up 1.3 percent.

Most FTSE 350 sectors rose, but retailers slipped 0.28 percent.

British borrowing costs dipped for a second day but remained well above levels seen before the Iran war, with markets now pricing roughly 50 percent odds of a Bank of England hike in November.

Investors’ focus this week will be on interest-rate decisions in the UK, the US, and Europe and comments from policymakers on how they intend to navigate potential energy-driven inflationary pressures. Most economists polled by Reuters abandoned their rate cut calls for March, now expecting a 25-basis-point cut in April or June. J.P. Morgan, however, expects the BoE to keep rates unchanged through 2026, with the next cut only in the first quarter of 2027. Among individual stocks, Close Brothers fell 3.5 percent to the bottom of the mid-cap index after the lender said it will cut 600 roles by fiscal 2027.

Trustpilot jumped 32 percent to the top of the mid-cap index after the global online review platform said it had quadrupled its annual profit.