London Stocks Gain Amid Eased Inflation and BoE Rate Cut Prospects

London stocks advanced on Wednesday with the FTSE 100 and FTSE 250 climbing 0.5% as UK consumer price inflation rose less than expected in July. This strengthens the likelihood of the Bank of England cutting interest rates in the next policy meeting. Most sectors gained except industrial metal miners.

On Wednesday, London stocks saw significant gains, with both the FTSE 100 and FTSE 250 indices rising by 0.5%, reaching a fresh two-week high. The momentum was driven by weaker-than-expected consumer price inflation in the UK for July, spurring hopes that the Bank of England (BoE) might cut interest rates in its upcoming policy meeting.

Every sub-sector in the London market experienced gains, except for industrial metal miners who saw a nearly 1% drop due to pressure on base metals following a substantial decline in Chinese lending. The UK's consumer price inflation inched up to 2.2%, marginally below economists' forecast of 2.3%, largely driven by a drop in services inflation.

Premier Miton Investors' CIO Neil Birrell commented on the inflation data, noting that while inflation was up slightly on a yearly basis, it undershot expectations, offering hope for continued easing of BoE policies. The pound fell against the U.S. dollar, and money markets increased their likelihood of a BoE rate cut next month to 47%. Among individual stocks, Aviva gained 0.3% following a robust half-year profit report, and Flutter skyrocketed 13% after upgrading its full-year outlook.

(With inputs from agencies.)