Stocks posted modest gains on Wednesday after better-than-expected inflation data and as investors watch interest rate decisions in the US and UK.
The FTSE 100 closed up 14.40 points, or 0.1%, at 10,508.61.
The FTSE 250 ended up gaining 38.15 points, or 0.2%, to 23,364.73, while the AIM All-Share rose 3.90 points, or 0.5%, to 807.83.
The price of oil stabilized after two days of sharp declines ahead of the start of US-Iran peace talks on Friday and the Federal Reserve's interest rate decision.
Oil prices had fallen in recent days as optimism grew that there would be a lasting peace deal in the Middle East, but investors took a breather on Wednesday and crude rose modestly.
Brent crude for delivery in August was trading higher on Wednesday at $80.11 a barrel, compared to $79.95 on Tuesday at the close of the London Stock Exchange.
In European stock markets on Wednesday, the CAC 40 in Paris closed down 0.2% and the DAX 40 in Frankfurt rose 0.1%.
In New York, the Dow Jones Industrial Average rose 0.4%, the S&P 500 was little changed and the Nasdaq Composite fell 0.1%.
After the European market closes, the US Federal Reserve is expected to leave interest rates unchanged, with all eyes on Kevin Warsh as he chairs his first meeting of the Federal Open Market Committee.
Kathleen Brooks, director of research at
Warsh has expressed a preference for less Fed communication, so “how he deals with the media this week is crucial to market sentiment. It will also give us a clearer idea of how the Fed might operate under Warsh,” Brooks added.
Thursday sees the Bank of England's rate call, where the central bank is also expected to leave interest rates unchanged.
“The subdued data, lack of explicit guidance in June, falling energy prices and the (Monetary Policy Committee's) patient approach likely mean a wait,” Bank of America analysts said.
In support of this, data from the Office for National Statistics showed that consumer price inflation remained at 2.8% in May, unchanged from April and below the consensus cited by FXStreet of an increase to 3.0%.
Core inflation, which excludes energy, food, alcohol and tobacco, accelerated slightly to 2.6% from 2.5%, although it was also below expectations of 2.7%.
“There are still minimal signs of spillover effects from the energy price shock, adding to our conviction that the Bank of England will remain on hold this year,” Barclays analysts said.
The pound was trading at $1.3393 on Wednesday afternoon, down from $1.3422 on Tuesday.
Against the euro, sterling fell to 1.1554 euros from 1.1567 euros on Tuesday.
The euro traded lower against the dollar, at $1.1591 on Wednesday versus $1.1603 on Tuesday.
Against the yen, the dollar was trading at 160.25 yen, down from 160.46 yen on Tuesday.
The 10-year US Treasury yield fell to 4.43% on Wednesday from 4.45% on Tuesday.
The 30-year U.S. Treasury yield fell to 4.92% from 4.95% on Tuesday.
Gold was trading at $4,356.32 an ounce on Wednesday, up from $4,323.46 on Tuesday.
The increase in the price of gold supported Endeavor Mining, with an increase of 5.0%, and Fresnillo, with an increase of 1.4%.
Inflation figures, which raised hopes that UK interest rates will not rise any time soon, supported housebuilders, with Berkeley Group up 1.9%, Barratt Redrow up 2.7% and Persimmon up 3.8%.
Barclays rose 3.4% as Bank of America raised its share price target to 600p from 570p and reiterated a “buy” rating.
“We believe recent developments in the operating environment, namely higher swap rates, strong loan growth in the UK, active capital markets, particularly in the US, and strong consumer trends in the US, should benefit Barclays given its business mix. Not only does this present upside earnings potential, but increased capital generation could also support further buybacks,” BofA said in a research note.
Weir Group rose 2.7% as it received a “significant” pump order from Lloyds Metals and Energy which it said shows the “strength of our technology”.
The order, secured in the first quarter of 2026, is part of the second phase of Lloyds Metals' pipeline project at its Surjagarh mine in Maharashtra, India.
Weir also supplied pumps for the first phase of the project: a 100 kilometer pipeline with a capacity of 10 million tonnes a year.
Elsewhere, Smiths News rose 9.8% after closing a long-term distribution deal with News UK, publisher of The Sun and The Times newspapers.
The deal extends the partnership until July 2037 and expands Smiths News' territories, making it the exclusive national distributor of News UK titles in Great Britain from July 2027.
The company expects the deal to add around £125 million in annual revenue thereafter.
The biggest risers on the FTSE 100 were Endeavor Mining, up 211p to 4,434p, Persimmon, up 40.5p to 1,119p, Barclays, up 16.55p to 503.5p, Weir Group, up 66p to 2,502p and Barratt Redrow, up 6.8p to 261.9p.
The biggest fallers on the FTSE 100 were Entain, down 27.6p to 567.4p, Halma, down 146p to 3,874p, Marks & Spencer, down 12.6p to 359.6p, J Sainsbury, down 8.1p to 301.4p and Burberry, down 30p to 1,127.5p.
Thursday's global economic calendar includes interest rate decisions in the United Kingdom and Switzerland, unemployment figures in the United Kingdom and PPI data in Canada.
Thursday's local corporate calendar includes trading statements from food retailer Tesco and Premier Inn owner Whitbread.
Contributed by Alliance News
