Sept 13 (Askume) – Precious metal mining shares boosted London’s blue-chip index on Friday as investors raised bets on a sharp U.S. interest rate cut next week, but export-oriented companies were hit by a stronger pound and profits were limited.
The FTSE 100 index (.FTSE) rose 0.4% and the mid-cap FTSE 250 index (.FTMC) rose 1%. Both stock indexes recorded weekly gains, with precious metals mining (.FTNMX551030) shares up more than 19.5% this week.
The index rose more than 6.8%, hitting its highest level in 15 months. Gold mining stocks Fresnillo (FRES.L) and Endeavor (EDV.L) gained 5.7% and 10.5%, respectively, as gold weakened against the dollar and hit a record high.
Gold prices rose on increased optimism about a rate cut by the Federal Reserve, capital inflows and a weaker dollar.
Beverages (.FTNMX451010) was the biggest decliner, falling 1.2%, after Italian spirits group Campari (CPRI.MI) warned of “very weak” conditions for the industry this quarter . British rival Diageo Plc(DGEL.L) fell 1.4%.
The Wall Street Journal and the Financial Times reported that the Federal Reserve may have difficulty deciding whether to cut interest rates by 25 basis points or 50 basis points at its meeting next Wednesday, and the pound has hit a one-week high against the dollar.
This increased traders’ expectation of a significant 50 basis points rate cut to 43%, up from 14% a day earlier, CME’s FedWatch tool showed.
At the same time, British public expectations for inflation in the coming year fell to a three-year low in August, which may give policymakers a breather ahead of next week’s interest rate decision.
A Askume survey of economists showed the Bank of England is expected to keep interest rates on hold at its upcoming meeting.
Among other stocks, Vodafone (VOD.L) rose 1.1% on hopes that the telecoms provider’s merger with Three UK will get regulatory approval if they can guarantee the $19 billion deal will benefit consumers.
Shares of Flutter Entertainment (FLTRF.L) rose 1.4% after the Irish gambling giant said it would acquire a 56% stake in NSX Group, which operates Brazilian gambling group Betnational, for about $350 million.
