London stocks climb as investors bet on BoE rate cut

UK stocks edged higher on Monday, starting the week on a positive note, with markets having almost fully priced in an interest rate cut by the Bank of England later this week.

The UK's blue-chip FTSE 100 .FTSE jumped 0.9% by 10:26 GMT, while the midcap FTSE 250 .FTMC index added 0.66%. Both indexes ended lower for a second consecutive week of declines on Friday.

According to a Reuters poll, analysts expect a narrow 5-4 vote to lower the benchmark rate to 3.75% from 4.0%, marking the first reduction since August and bringing borrowing costs to a three-year low.

Governor Andrew Bailey's stance is seen as pivotal after recent data showed inflation easing to 3.6% in October, with further declines expected.

Analysts see Bailey's vote as crucial, with easing inflation strengthening the case for a cut. While rate expectations dominated sentiment, gains in precious metals added further support to the market.

An index of personal goods .FTNMX402040, dominated by luxury names, led with a 2.3% jump, after China announced plans to expand exports and imports next year as part of efforts to promote what it called "sustainable" trade. Burberry BRBY.L rose 2.6% and Watches of Switzerland Group WOSG.L added 2.3%.

Precious metal miners .FTNMX551030 were up 1% as gold XAU= held near a seven-week high and silver XAG= extended gains against a softer dollar.GOL/

Banks .FTNMX301010 were also a standout, up 1.3%, with with Standard Chartered STAN.L gaining 2.1% and Barclays BARC.L adding 1.8%. Industrial metals and mining stocks .FTNMX551020 advanced 1.25%, with Glencore GLEN.L up 1.3% and Antofagasta ANTO.L up 2.8%.

Among individual stocks, Hikma Pharmaceuticals HIK.L fell 1.4% to the bottom of the FTSE 100 after the drugmaker said its CEO Riad Mishlawi is stepping down, with Executive Chairman and former CEO Said Darwazah assuming the responsibilities of the top role.

Primark-owner Associated British Foods ABF.L fell 1% after Jefferies cut its rating to "underperform" from "hold" and cut its target price to 1800 pence from 2000 pence.

Britain's biggest defence company BAE Systems BAES.L slipped 1% in step with weaker European defence sector.