London stocks rose for a third straight day on Wednesday as investors ramped up bets on interest rate cuts from the Bank of England after data showed that inflation had unexpectedly held steady.
British lender Barclays advanced 5% among the top movers on the FTSE 100 index after announcing a surprise 500 million-pound ($670 million) share buyback and upgrading a key profitability target for the year. This boosted the bank’s index by 1.5%.
Inflation for the month of September was held at 3.8%, below the Bank of England’s estimates of 4%, and raising bets on a rate cut this year. Traders see a roughly 75% chance that the BoE’s Monetary Policy Committee will cut the bank rate to 3.75% from 4% at its December meeting.
That was up from about a 46% chance before the data,which “could give the central bank the confidence to carry out one more rate cut most likely in December, which would be another win for the government”, said Victoria Scholar, head of investment at Interactive Investor.
The data also brought much-needed relief ahead of the November budget for finance minister Rachel Reeves, who along with BoE policymakers has been trying to navigate through sticky inflation and slow economic growth.
The blue-chip FTSE 100 gained 1%, while the mid-cap focused FTSE 250 advanced 1.4%.
Oil majors BP and Shell gained 1.8% and 1.7%, respectively, as oil prices edged higher.
Among individual stocks, Rio Tinto advanced 2.1% after sources said the miner explored a potential asset-for-equity swap with Chinalco which would trim the Chinese investor’s 11% stake. That would help the company to resume buybacks and pursue new strategic deals.
On the flip side, ITV shares slid 7.8% after the broadcaster said its largest shareholder Liberty Global reduced its stake to 5% from 10% in the company. The stock was the worst performer in the FTSE 250.
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