FTSE 100 rebounds from worst week since mid-August on financials boost

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London’s FTSE 100 rose on Monday, rebounding from its worst weekly performance since mid-August helped by gains in economy-linked stocks, while Associated British Foods slipped to the bottom of the index following an earnings update.

The blue-chip index climbed 0.5%, after sliding 1.5% last week on concerns around stalling domestic economic recovery.

Oil majors BP and Royal Dutch Shell rose 1% each, tracking crude prices, while banks jumped 1.3% to provide the biggest boost to the index.

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The domestically focused mid-cap FTSE 250 index advanced 0.3%.

Investor focus is now on U.S. and UK data releases later this week, including jobs and keenly watched inflation and retail sales for clues on monetary policy actions ahead of central bank meetings next week.

“The narrative is clearly moving towards a tapering of asset purchases sooner rather than later. There appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe,” said Michael Hewson, chief market analyst at CMC Markets UK.

“In July both UK and U.S. consumer prices saw a pause as some base effects dropped out of the headline numbers, and while there is some expectation that this might continue in August, this appears to be more of a hope than anything else.”

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Last week, a Reuters poll forecast that the Bank of England will raise borrowing costs by end-2022, earlier than previously thought, and there is a chance it comes even sooner.

Among stocks, Associated British Foods fell 3% after fourth-quarter sales at its Primark fashion business were lower than expected.

SThree gained 6.2% after the recruiter forecast annual earnings “significantly above” current market estimates.

Transport company FirstGroup jumped 3.4% after saying its first bus passenger volumes reached 65% of pre-pandemic levels on average in recent weeks. (Reporting by Devik Jain in Bengaluru; Editing by Shounak Dasgupta)

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