UK midcaps inch up on earnings strength; commodity-stocks drag FTSE 100

By Shubham Batra and Johann M Cherian

(Reuters) -British midcap stocks eked out a marginal gain on Tuesday, underpinned by a slew of positive earnings, while the benchmark FTSE 100 slipped as declines for commodity-linked stocks outweighed gains in Associated British Foods.

The midcap FTSE 250 index rose 0.1% with Watches of Switzerland soaring 13.1%, its best day in nearly two years as the luxury retailer outlined plans to more than double its annual profits by fiscal year 2028.

Persimmon surged 5.9% after it said it would build more homes this year than its earlier expectation.

However, the FTSE 100 dipped 0.1% as energy stocks and industrial metals miners weighed after weak trade data from top-consumer China dulled the demand outlook for commodities. [O/R] [MET/L]

Still, Associated British Foods topped charts on the benchmark index, jumping 6.8% after it forecast “meaningful progress” in its new financial year, driven by a strong recovery in the margins of its Primark fashion business.

“It is a real mixed bag today. I think investors are just trying to really figure out what next,” said Danni Hewson, head of financial analysis at AJ Bell.

“On one hand, we’ve got concern about potential recession but at the same time we have this expectation that interest rates won’t stay as high for as long and certainly have now reached their peak which investors are sort of filtering in.”

Domestically-focused midcaps had ended the last three months leading up to November in losses on rate-hike worries. Traders are now pricing in possible rate cuts next year.

Among other movers, Direct Line Insurance Group rose 8% after the insurer posted an increase in gross premiums written in the third quarter.

Homebuilders were also among top gainers, rising 2.5% after domestic house prices ended six consecutive months of decline in October.

Meanwhile, the Bank of England said it was considering a set of “fundamental rules” for securities and derivatives clearing and settlement houses as it revamps domestic regulation post-Brexit.

(Reporting by Shubham Batra and Johann M Cherian in Bengaluru; Editing by Janane Venkatraman, Dhanya Ann Thoppil and Alex Richardson)