UK shares jump as strong economic growth lifts risk appetite

British pound coins are seen in front of displayed stock graph in this illustration taken, November 9, 2021. REUTERS/Dado Ruvic/Illustration

March 11 (Reuters) – UK shares rose on Friday as Britain’s economy rebounded more than expected, raising the prospects of a rate hike next week, while the mid-cap index was on course for its best weekly performance in more than a year.

The blue-chip FTSE 100 index (.FTSE) gained 0.7% in early trading, rising 2.5% so far in the week. The FTSE mid-cap index (.FTMC) climbed 0.9% and was on track for its best week since February 2021.

Data showed that gross domestic product (GDP) grew by 0.8% in month-on-month terms in January after a 0.2% decline in December. That was the strongest monthly expansion since June and more than forecast by any economist in a Reuters poll, which had pointed to growth of 0.2%. read more

“GDP figures could make it easier for the central bank to hike rates, but I think they’re looking beyond this and will be focused on what the effects of this Ukraine situation are, and I don’t believe that to be very bullish,” said Keith Temperton, a sales trader at Forte Securities.

“With energy prices maintaining sort of extended high levels, it’s going to be a major headwind for the economy, not just for UK but for global as well.”

Energy stocks (.FTNMX601010) climbed 2.4%, rising nearly 8% so far this week, supported by a rally in oil prices as Russia’s invasion of Ukraine raised concerns of supply disruption through the global energy market.

UK shares have outperformed their peers in the United States and the rest of Europe so far this year, as robust oil prices supported the commodity-heavy index.

Base metal miners (.FTNMX551020) jumped 2.2% with Glencore (GLEN.L), Anglo American (AAL.L), Rio Tinto (RIO.L) up between 0.8% and 1.6%, tracking strong metal prices.

Among individual stocks, Avast (AVST.L) rose 0.2% after the cybersecurity firm joined a growing number of Western companies in suspending operations in Russia and Belarus amid the Ukraine crisis. read more

Berkeley rose 0.8% after the housebuilder joined bigger rivals in highlighting persistent strong demand in an under-supplied housing market, but flagged worries around broadening inflationary risks, supply chain disruptions and cladding issues. read more

Reporting by Amal S in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips

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