LONDON: Financials led London’s FTSE indexes slightly higher on Friday, ending a week-long sell-off caused by nervousness about the economic impact of the US-Israeli war on Iran and high oil prices. The blue-chip FTSE 100 index closed up 0.4 percent, but logged its biggest weekly loss since late July.
The midcap FTSE 250 finished 0.4 percent higher too and marked its sharpest weekly decline in more than four months.
Heavyweight banks rebounded after three sessions of declines, with HSBC and Barclays up 1.5 percent and 1.9 percent respectively.
“There were cautious gains for some of the names caught up in the recent volatility… Banks were also in demand as rates look set to stay higher for longer,” said Russ Mould, investment director at AJ Bell.
Construction and Materials stocks rose 1.8 percent, making them the biggest percentage gainers.
Sentiment rallied after a 2 percent drop in oil prices on Friday following a report that Gulf foreign ministers could meet their Iranian counterparts to discuss temporary shipping arrangements in the Strait of Hormuz.
The broader energy sector has gained the most this week after oil climbed above the psychological USD 100 mark.
Data showed the economy grew at the fastest annual pace in 18 months in July on a possible AI boost, further improving sentiment.
Nervousness about the impact of oil prices on inflation is high
Traders price in 44 basis points of rate hikes by the Bank of England by year-end, up from around 25 bps two weeks ago, LSEG data showed. Investors also assessed US data that showed consumer inflation rose the most in four months in August, reinforcing expectations that the Federal Reserve will raise interest rates next week.
Among the losing stocks, telecom company Gamma Communications fell 2.9 percent after Dutch private equity firm Waterland ended plans to team up with Giacom for a takeover offer.
Harbour Energy underperformed by 1.9 percent after its biggest shareholder BASF reduced its stake.
The global bond rout also paused on Friday and gilts staged a partial recovery.