By Shashwat Chauhan and Shristi Achar A
(Reuters) – London stocks rose on Friday as financial stocks gained, while the indexes ended the quarter lower as inflationary pressures and a hawkish Bank of England dented risk appetite.
The blue-chip FTSE 100 and the more domestically-focussed FTSE 250 midcap index each added 0.8% and closed the week with gains.
UK banks got the biggest boost, up 0.9%, and among the top performers in the quarter.
Telecommunications were the session’s only laggard, down 0.3% as UBS lowered its estimates for the sector’s capital expenditure, driven mainly by inventory correction in wireless.
Both UK stock indexes snapped two successive quarters of gains as surging domestic inflation and a rising global interest rate environment took the wind out of equities.
“The fear regarding the UK is stagflation and a Bank of England that seems determined to raise rates in the face of inflationary pressures,” said Steve Sosnick, chief strategist at Interactive Brokers.
Additionally, final estimates from the Office for National Statistics (ONS) showed Britain’s economy grew 0.1% in the first quarter of this year, unrevised from an initial estimate.
Meanwhile, mortgage lender Nationwide said British house prices fell by the most since 2009 in the 12 months to June, although monthly data showed a small unexpected rise.
“Given sticky inflation and raising interest rates, that (monthly) read was probably a bit of a surprise,” said Christopher Peters, trading floor manager at Accendo Markets.
Housing-related stocks such as real estate, real estate investment trusts and homebuilders gained around 0.7%.
Barratt Developments edged up 0.3% after the housebuilder agreed to a sale of 604 homes to Citra Living Properties for a cash consideration of 168.4 million pounds ($212.6 million).
Petrofac jumped 7.4% after the oilfield services firm said Abu Dhabi National Oil Company (ADNOC) had awarded the company a $700 million contract.
(Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Sonia Cheema, Nivedita Bhattacharjee and Toby Chopra)
