British equities rise on UK-US trade deal optimism; eyes on BOE rate decision

By Ragini Mathur and Twesha Dikshit

May 8 (Reuters) - Britain's main indexes climbed on Thursday, with news that U.S. President Donald Trump would announce a trade deal with Britain boosting investor sentiment, just ahead of the Bank of England's expected rate cut.

By 0940 GMT, the blue-chip FTSE 100 .FTSE was up 0.3%, while the domestically focused midcap index .FTMC advanced 0.9%.

The globally focused FTSE 100 on Tuesday completed 16 straight days of gains, its longest winning streak on record, powered by strong first-quarter earnings and optimism over easing global trade tensions.

The Bank of England is set to announce its May interest rate decision and latest economic forecasts at 1102 GMT, with markets widely expecting a quarter-point cut to 4.25%.

"A base rate cut looks nailed on, but what will be most significant is the banks' future guidance," said Jeff Brummette, chief investment officer at Oakglen Wealth.

On Wednesday, the U.S. Federal Reserve kept its key interest rate on hold and said uncertainty about the economic outlook had increased with higher risks of a rise in both unemployment and inflation.

On the trade front, the United States and Britain are expected to announce a deal to lower tariffs on some goods.

Trump posted on Truth Social that he would hold an Oval Office news conference at 1400 GMT on Thursday, stating, "This should be a very big and exciting day for the United States of America and the United Kingdom."

A deal would be the second for Britain in a week after it clinched a free trade pact with India.

On the blue-chip index, IMI IMI.L emerged as the top performer, gaining 4.7%, after the specialist engineering company reaffirmed the financial year 2025 outlook.

InterContinental Hotels Group IHG.L rose 3% after the Holiday Inn owner said it is on track to meet the full-year consensus profit estimate.

Renishaw RSW.L jumped 15.8% to the top of the midcap index after the engineering firm said it will shut down loss-making drug delivery operations and introduce a surcharge to pass on additional costs brought on by U.S. tariffs.

On the flip side, the healthcare index .FTNMX201030 led the losses for the second consecutive day, down 2%.

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