UK stocks end quarter on high note after stronger-than-expected domestic growth

By Siddarth S and Medha Singh

(Reuters) -British stocks ended September-quarter higher on Friday with domestically focused mid-cap stocks snapping a six-day losing streak after data showed UK’s economy fared better in the second quarter than previously thought.

The FTSE 100 ended 0.1% higher and closed the third quarter with 1% gain, after a 1.3% fall in the previous quarter.

However, the benchmark index is on track for a second consecutive weekly decline, taking its year-to-date gains to 2.1%, lagging the broader European STOXX 600’s 6% rise.

“Given how poorly the FTSE 100 has performed for most of this year there is a sense that any downside could well be limited in the current environment,” said Michael Hewson, chief market analyst at CMC Markets.

Meanwhile, the mid-cap FTSE 250 index jumped 1.0%.

Latest data showed Britain’s second-quarter GDP was 1.8% larger than that in the final three months of 2019, the last full quarter before the start of the COVID-19 pandemic, a big upward revision from the most recent estimate. The growth was also faster than that of Germany and France.

“UK economy is actually holding up much better and the consumer is more resilient and that could potentially mean another rate hike by the end of the year and then higher-for-longer rates,” said Anthi Tsouvali, multi-asset strategist at State Street Global Markets.

Traders are betting there is a 67% chance the Bank of England will again hold fire at its November meeting after the central bank unexpectedly held rates steady at 5.25% last week.

The sectors leading gains were chemicals, up 3.1%, and real estate, which rose 2.5%, while shares of oil and gas companies lagged the most.

Among single stocks, Aston Martin climbed 9.5% after the luxury carmaker said Chairman Lawrence Stroll’s Yew Tree Consortium further raised its stake in the firm.

Severn Trent shares rose 4.4% after the British water supplier said it would raise 1 billion pounds ($1.2 billion) in new equity.

Elsewhere, British lenders approved the fewest mortgages in six months in August, data showed.

(Reporting by Siddarth S and Medha Singh in Bengaluru; Editing by Dhanya Ann Thoppil, Sohini Goswami and Shinjini Ganguli)