UK stocks rise as easing oil prices lift sentiment; Fed decision awaited
By Tharuniyaa Lakshmi
March 18 (Reuters) - London shares extended gains on Wednesday, as oil prices retreated and offered some relief to rattled global markets, while investors awaited the U.S. Federal Reserve rate decision later in the day.
The Middle East war, in its third week, showed no signs of easing as Israel and Iran intensified attacks following the killing of Tehran’s security chief. Oil, however, fell after Iraq resumed exports through the Ceyhan pipeline. O/R
UK's blue-chip FTSE 100 .FTSE was up 0.3% by 1044 GMT, rising for the third consecutive day, while the mid-cap FTSE 250 .FTMC rose 1%.
Aerospace and defence .FTNMX502010 jumped 2% and financials .FTNMX301010 added 1.9%, leading the day’s gains.
The energy sector .FTNMX601010 fell 0.6% from Tuesday's record high. Ithaca Energy ITH.L dropped 5.2% after the oil and gas producer swung to an annual net loss.
Meanwhile, markets expect the Fed to keep rates unchanged. Investors will closely parse the Fed's outlook for any signals on future monetary policy direction.
At home, British government borrowing costs fell to their lowest in a week, though they remain higher than before the conflict amid worries about inflation and uncertainty over further Bank of England rate cuts.
Most economists polled by Reuters abandoned their calls for a March 19 BoE rate cut and now expect a 25‑basis‑point trim in April or June.
“Despite energy market developments, we see one 25-bp cut to the BoE’s policy rate on the cards late this year. Moreover, we see fears of a rate hike by the BoE as overdone, given the tendency for central banks to ‘look-through’ energy shocks,” said Grant Slade, economist at Morningstar.
"We expect the BoE to hold Bank Rate steady at 3.75% at tomorrow's MPC meeting."
Among individual stocks, Diploma DPLM.L jumped 18.2% to a record high after the technical products and services distributor raised fiscal year 2026 guidance.
IT firm Softcat SCTS.L rose 8.9% after raising its annual profit forecast.
