UK midcaps hit 2-month high on inflation cheer; Diageo slides

By Khushi Singh and Johann M Cherian

(Reuters) -UK stocks finished strong on Wednesday with the midcap FTSE index having touched a two-month high earlier on signs of easing consumer inflation, while whisky maker Diageo dropped after flagging pressures in Latin America.

Data showed domestic consumer inflation cooled more than expected in October as household energy prices dropped from a year ago, strengthening investor bets that the Bank of England might steer clear of further monetary tightening to protect economic growth.

“This report lends further support to the BoE’s recent commentary that interest rates have now reached sufficiently high levels to slow the economy down,” said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.

The benchmark FTSE 100 closed 0.6% higher, while the domestically focussed FTSE 250 ended 0.8% higher, its third straight day of gains.

Markets are now expecting the central bank to commence rate cuts by the middle of 2024.

Rate sensitive banks were the biggest boost to the top FTSE index on Wednesday, adding 1.8%, while the real estate sector slipped 0.5%.

Limiting gains, the beverages sector slid 1.6%, bogged down by a 1.8% tumble in Diageo after CEO Debra Crew said it was difficult to predict when the firm could clear inventory issues in Latin America.

Tullow Oil jumped 10.3% after the oil explorer raised its annual cash flow outlook and moved to ease concerns about its debt.

Ocado advanced 5.6% after the online supermarket group said it had secured its first deal outside of grocery retail, providing its robotic warehouse technology to a site of drug distributor McKesson’s Canada unit.

Shares of Experian rose 7.5% after the world’s largest credit data company reported an increase in half-year profit.

Fuller Smith & Turner’s shares jumped 11.5% after the pub group reported a surge in current bookings from a year earlier, while SSE Plc topped its half-year earnings forecast, taking shares of the power generator up 2.3%.

(Reporting by Khushi Singh and Johann M Cherian in Bengaluru; Editing by Dhanya Ann Thoppil and Devika Syamnath)