Rate-cut optimism, autos push UK stocks higher

By Khushi Singh and Shubham Batra

(Reuters) -London stocks rose on Wednesday led by a surge in automobiles and parts stocks, while investors latched on to the year-end optimism that major central banks including the Bank of England could begin cutting interest rates early in 2024.

The blue-chip FTSE 100 climbed 0.4% after touching seven-month highs earlier in the session. The FTSE 250 midcap index was up 0.5% to close at its highest level since March 2023.

Automobiles and parts index claimed a six-week high to rise 1.9%, leading the gains among sectors, while the biggest losers were the energy shares that fell 0.3% tracking lower oil prices.

Shares in industrial metal miners added 0.7%, as prices of most base metals rose after data showed manufacturing activity in top consumer China improved last month, while a weak U.S. dollar also lent support to the market. [MET/L]

“The Chinese government is now boosting the industrial side of the things, reverting back from their focus on consumers because that’s obviously not working well,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

The FTSE 100 is set to end the year on a higher note, driven by expectations that the Fed could begin cutting rates as early as March, with other central bankers to follow.

In corporate news, Anglo American shares climbed 2.3% and were among the top gainers on FTSE 100 after a reportthe miner was looking to sell part of its stake in a $9 billion UK mining project.

Darktrace was up 3.6% on news that tech entrepreneur Michael Lynch had disclosed a 3.92% stake in the cyber-security company.

AstraZeneca’s shares gained 0.9% after a deal to buy Gracell Biotechnologies for up to $1.2 billion as the pharma company furthers its cell therapy ambitions and boosts its presence in China.

The broader pharma and biotech index advanced 0.6%.

(Reporting by Khushi Singh in Bengaluru; Editing by Sonia Cheema, Shailesh Kuber and Barbara Lewis)