Economic news

UK Shares move Higher due to Progress with Ukraine Talks

  • UK economy grows 0.8% in January
  • Blue-chip index eyes best week since Jan 2021
  • FTSE 100 up 1.7%, FTSE 250 adds 2.7%

March 11 (Reuters) - UK shares extended gains on Friday as positive signals from Russian President Vladimir Putin on talks with Ukraine added to support from data that showed a strong rebound in the economy.

The blue-chip FTSE 100 index spiked 1% to 1.7% in afternoon trading on the report. The FTSE mid-cap index climbed 2.7% and was on track for its best week since November 2020.

Data showed that gross domestic product (GDP) grew by 0.8% in month-on-month terms in January after a 0.2% decline in December. That was the strongest monthly expansion since June and more than forecast by any economist in a Reuters poll, which had pointed to growth of 0.2%.

"GDP figures could make it easier for the central bank to hike rates, but I think they're looking beyond this and will be focused on what the effects of this Ukraine situation are, and I don't believe that to be very bullish," said Keith Temperton, a sales trader at Forte Securities.

"With energy prices maintaining sort of extended high levels, it's going to be a major headwind for the economy, not just for UK but for global as well."

Putin said on Friday there had been some progress in Moscow's talks with Ukraine, but provided no details.

Yields on UK bonds - both longer and shorter-dated jumped. Banking shares advanced 3.2%.

UK shares have outperformed their peers in the United States and the rest of Europe so far this year, as robust oil prices supported the commodity-heavy index.

Base metal miners jumped 1.4% with Glencore, Anglo American, Rio Tinto up between 1.2% and 3%, tracking strong metal prices.

Among individual stocks, Berkeley rose 2.3% after the housebuilder joined bigger rivals in highlighting persistent strong demand in an under-supplied housing market, but flagged worries around broadening inflationary risks, supply chain disruptions and cladding issues. 

Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila

Source: Reuters

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