May 14 (Reuters) - UK shares edged up on Thursday, as strong first-quarter economic growth offered some respite to investors shaken by escalating political uncertainty in the country.
The blue-chip FTSE 100 index ended 0.46% higher, while the mid-cap FTSE 250 rose 1.33%.
Data showed Britain's economy grew unexpectedly in March, suggesting it was in better shape than many feared after a sluggish fourth quarter last year.
However, some analysts warned that stockpiling of goods due to supply chain disruptions stemming from the Middle East conflict could have inflated the figures.
"We need to be cautious about judging the genuine trend," said Rob Wood, chief UK economist at Pantheon Macroeconomics.
Economists also said issues related to measuring post-pandemic shifts in spending may be contributing to the pattern of strong first-quarter growth.
George Brown, senior economist at Schroders, said that economic strength may wane as the year progresses.
"UK GDP has developed a habit of starting the year well, only for momentum to slow due to residual seasonality... That should mean the Bank of England talks tough but stops short of the hikes markets are pricing in."
Market participants expect the central bank to raise rates at least two times this year, according to data compiled by LSEG.
QUESTIONS REMAIN OVER STARMER'S FUTURE
Prime Minister Keir Starmer's future hung in the balance after Wes Streeting resigned as health minister and called for his ouster, following disastrous results for the Labour Party in last week's local elections.
Investors are worried that Starmer's potential successor could advocate for increased spending, adding pressure to Britain's already strained finances.
Long-term British borrowing costs surged to their highest in nearly 30 years earlier this week.
Among individual stocks, Legal and General rose 6.16% and was among the top percentage gainers on the FTSE 100, after the Financial Times reported possible buying interest was building in the company.
Auto stocks advanced 3.23%, outweighing a 3% slide in the investment banking index, dragged by a 12.76% decline in 3i Group.
The investment firm's stock hit its lowest since 2023 amid a slowdown at discount retailer Action, its key portfolio company.
Reporting by Niket Nishant in Bengaluru; Editing by Harikrishnan Nair and Diti Pujara
Source: Reuters