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UPDATE 1-FTSE 100 edges higher on energy, defence boost

Reuters · 11/16/2022 05:11
UPDATE 1-FTSE 100 edges higher on energy, defence boost

FTSE 100 up 0.2%, FTSE 250 off 1.3%

Sage Group jumps on reporting rise in profit

Hill & Smith gains on upbeat forecast

Higher inflation reading ahead of Autumn budget

For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a window

By Shashwat Chauhan and Sruthi Shankar

- The FTSE 100 rose on Wednesday, lifted by energy and defence stocks, even as hotter-than-expected inflation data highlighted a severe cost-of-living crisis that has put the British economy at the risk of a sharp recession.

The exporter-heavy FTSE 100 .FTSE inched 0.2% higher, hovering a two-month high.

Oil & gas stocks .FTNMX601010 rose 1.7% on the back of higher crude prices after an incident involving a commercial vessel off the coast of Oman. O/R

UK's aerospace and defence index .FTNMX502010 jumped 1.5% as geopolitical tensions rose after a missile hit a village in Poland, close to the Ukraine border. The missile, which killed two people, was unlikely to have been fired from Russia, U.S. President Joe Biden said. Russia denied it was responsible.

Surging household energy bills and food prices pushed British inflation to a 41-year high in October, according to data published a day before finance minister Jeremy Hunt is expected to announce tax hikes and spending cuts to control price growth.

Consumer prices rose by 11.1% in annual terms last month, while economists polled by Reuters had forecast the inflation rate would rise to 10.7%.

"These sit uncomfortably alongside the message sent from the Bank of England in its last meeting when it argued that only modestly higher interest rates would be to bring inflation back towards its 2% target," said Mike Bell, global market strategist at J.P. Morgan Asset Management.

"We are so convinced."

The pound GBP=D3 edged higher after hitting a three-month high in the previous session.

Bank of England officials will address the parliament's Treasury Committee about the central bank's decision to increase interest rates at 1415 GMT.

Among individual stocks, British software company Sage Group SGE.L jumped 6.4% after reporting a 8% rise in full-year organic operating profit.

Hill & Smith HILS.L gained 3.5% after the infrastructure group said it expects full-year outlook to be ahead of its expectations.

The midcap index .FTMC fell 1.3%, with shares of Carnival Plc CCL.L sinking 11.7% after the cruise operator said it was planning $1 billion convertible debt deal.

(Reporting by Shashwat Chauhan and Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips and Savio D'Souza)


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