FTSE 100 hits 1-week high on US rate cut optimism

Aug 13 (Reuters) - London shares rallied on Wednesday, with the blue-chip FTSE 100 index reaching a one-week intraday peak, as expectations of a U.S. Federal Reserve interest rate cut buoyed demand for risk assets globally.

As of 0943 GMT, FTSE 100 .FTSE was up 0.2%, rising for a third consecutive session. The domestically focused midcap index gained 0.3%.

Global stocks continued to climb after Tuesday's release of U.S. inflation data for July. The figures, which was viewed as a critical indicator for a potential Fed interest rate cut in September, largely met expectations.

This bolstered confidence in a 25-basis-point rate reduction and propelled Wall Street to fresh highs in the previous session.

The positive sentiment swept through UK markets on Wednesday, with healthcare .FTNMX201030 and defence .FTNMX502010 sectors leading the way, rising 1.5% and 1%, respectively.

Investor attention is now shifting to Friday's high-stakes talks between U.S. President Donald Trump and Russian President Vladimir Putin, aimed at negotiating a peace deal to end the conflict in Ukraine.

European and Ukrainian leaders will speak to Trump on Wednesday to emphasize the risks of compromising Kyiv's interests in pursuit of a ceasefire.

Meanwhile, financials came under pressure with the non-life insurers index .FTNMX303020 falling 3.7%. Beazley BEZG.L tumbled 11% after lowering its annual premium growth forecast, partly hurt by subdued demand for its cyber and property risk insurance.

Housing sector .FTNMX402020 also fell 0.9%, as homebuilder Persimmon PSN.L dropped 2.9%, after cautioning about next year's margin despite forecasting higher home sales.

Shell SHEL.L inched 0.8% down. The LNG major said on Tuesday that Venture Global VG.N has won a legal battle against it over its failure to deliver liquefied natural gas under long-term contracts starting in 2023.

Among other movers, infrastructure products maker Hill & Smith HILS.L topped the gains on the midcap index, rising 12%, after its half-yearly results and announcement of a 100 million British pound ($135.70 million) share buyback program.

($1 = 0.7369 pounds)

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