London stocks climb after Wall Street rally

By Sruthi Shankar

(Reuters) -London’s main stock indexes climbed on Monday after a record-setting rally on Wall Street helped outweigh concerns about a slowing British economy and sticky inflation.

The blue-chip FTSE 100 edged up 0.2%, with banks in the lead, while the domestically focussed FTSE 250 rose 0.7%.

Wall Street’s benchmark S&P 500 hit an all-time high on Friday, as chipmakers and technology stocks rose over optimism around artificial intelligence (AI). Futures pointed to fresh gains in U.S. stocks. [.N]

“The FTSE 100 is largely sitting on the sidelines of the tech rally, given the lack of star names in the index,” noted Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“However, retail stocks have started on the front foot, as speculation has swirled about the potential for tax cuts in the UK Budget in March. It seems to have inspired a bit of confidence that respite is on the way for the retail sector.”

British finance minister Jeremy Hunt said he would use his budget statement in March – possibly his last before a national election expected this year – to boost economic growth and tax cuts were part of his plans.

The FTSE 350 retail index rose 0.9%, having shed 6.6% on a year-to-date basis.

Both the UK indexes marked their third consecutive weekly declines on Friday after a stronger-than-expected inflation reading and slump in December retail sales raised concerns about a potential recession and complicated the outlook for interest rates.

Barclays climbed 3% after Morgan Stanley said it expects the British lender to give a three-year guidance with increased clarity on distributions policy when it releases its full-year results next month.

S4 Capital added 3.3% after Martin Sorrell’s digital advertising group issued a fourth-quarter trading update that was in-line with the its previous forecast.

Compass Group edged up 0.3% after the catering firm said it had agreed to buy rival CH&CO for an initial enterprise value of 475 million pounds ($603.16 million).

($1 = 0.7875 pounds)

(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich and Shailesh Kuber)