UK stocks edged higher on Monday, starting the week on a positive note, with markets having almost fully priced in an interest rate cut by the Bank of England later this week. The UK's blue-chip FTSE 100 (.FTSE), opens new tab jumped 0.9% by 10:26 GMT, while the midcap FTSE 250 (.FTMC), opens new tab index added 0.66%. Both indexes ended lower for a second consecutive week of declines on Friday.
According to a Reuters poll, analysts expect a narrow 5-4 vote to lower the benchmark rate to 3.75% from 4.0%, marking the first reduction since August and bringing borrowing costs to a three-year low.
Governor Andrew Bailey's stance is seen as pivotal after recent data showed inflation easing to 3.6% in October, with further declines expected. Analysts see Bailey's vote as crucial, with easing inflation strengthening the case for a cut. While rate expectations dominated sentiment, gains in precious metals added further support to the market.
An index of personal goods (.FTNMX402040), opens new tab, dominated by luxury names, led with a 2.3% jump, after China announced plans to expand exports and imports next year as part of efforts to promote what it called "sustainable" trade. Burberry (BRBY.L), opens new tab rose 2.6% and Watches of Switzerland Group (WOSG.L), opens new tab added 2.3%.
Precious metal miners (.FTNMX551030), opens new tab were up 1% as gold held near a seven-week high and silver extended gains against a softer dollar.
Banks (.FTNMX301010), opens new tab were also a standout, up 1.3%, with with Standard Chartered (STAN.L), opens new tab gaining 2.1% and Barclays (BARC.L), opens new tab adding 1.8%. Industrial metals and mining stocks (.FTNMX551020), opens new tab advanced 1.25%, with Glencore (GLEN.L), opens new tab up 1.3% and Antofagasta (ANTO.L), opens new tab up 2.8%.
Among individual stocks, Hikma Pharmaceuticals (HIK.L), opens new tab fell 1.4% to the bottom of the FTSE 100 after the drugmaker said its CEO Riad Mishlawi is stepping down, with Executive Chairman and former CEO Said Darwazah assuming the responsibilities of the top role.
Primark-owner Associated British Foods (ABF.L), opens new tab fell 1% after Jefferies cut its rating to "underperform" from "hold" and cut its target price to 1800 pence from 2000 pence.
