London stocks log weekly gains as cenbank fest ends

By Shashwat Chauhan and Shubham Batra

(Reuters) – The UK’s FTSE 100 fell on Friday led by a drop in pharma and biotech stocks, but both the major equity averages managed to eke out some gains for the week that was dominated by interest rate decisions from major central banks.

The blue-chip FTSE 100 slid 1.0%, and the FTSE 250 midcap index edged 0.3% lower.

Investor sentiment was bolstered this week after the U.S. Federal Reserve signalled that it could pivot to rate cuts next year, leading to the exporter-heavy FTSE 100 logging its third straight weekly gain, while the mid-cap index posted sharp weekly advances as well.

However, the Bank of England (BoE) and the European Central Bank both hinted on Thursday that rates would remain higher for longer.

Goldman Sachs said it expects the BoE to deliver its first rate cut in June, compared to a previous expectation of August.

On the day, industrial metal miners jumped 1.2%, while energy stocks reversed earlier gains to slide 1.0% as oil prices eased after New York Fed President John Williams pushed back on surging market expectations for interest rate cuts. [O/R] [MET/L]

“Given the sharp move in bond markets since Wednesday it was perhaps felt necessary to pour a little cold water on the moves of the last 48 hours, with Williams sent out to say it was premature to be thinking in terms of rate cuts,” said Michael Hewson, chief market analyst at CMC Markets UK.

AstraZeneca fell 2.7% after rising for the last three sessions, dragging the pharma and biotech sector down by 2.6%.

Among individual stocks, Trainline surged 11.3% following news that the UK government has ditched plans for a centralised online rail ticket retailer.

Meanwhile, a preliminary reading showed companies in Britain’s services sector witnessed another pick-up in growth this month.

(Reporting by Shashwat Chauhan and Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips, Sonia Cheema and Jonathan Oatis)