UK's Stock Index Hits Three-Month High Amid Global Economic Data Anticipation

The UK’s main stock index reached a three-month peak, closing a volatile month positively, with bank shares leading. Despite global market concerns, relief was noted as the Federal Reserve hinted at rate cuts. Key upcoming data include the U.S. and euro zone's inflation figures, critical for central bank policies.

The UK's main stock index hit a three-month high on Friday, closing out a volatile month on a positive note, led by gains in bank shares ahead of critical global economic data. Investors are keenly watching these figures to gauge the pace of interest rate cuts by major central banks.

The blue-chip FTSE 100 index rose 0.3% as of 0706 GMT, setting the stage for its second consecutive monthly gain and third straight weekly advance. Meanwhile, the mid-cap FTSE 250 increased 0.2%, although it faced a likely monthly decline.

The pharmaceutical sector emerged as the top monthly performer, whereas personal goods shares suffered the most. On the trading day, Close Brothers Group and HSBC led the banks index with a rise of 0.8%, while telecommunications and media shares lagged.

August witnessed significant market volatility amid fears of a potential U.S. recession and yen-funded carry trades. However, the speculation of an imminent rate cut by the Federal Reserve brought some relief. The focus now shifts to the U.S. inflation report and the euro zone's flash inflation data, both set for release later today.

On the monetary policy front, the Bank of England is predicted to maintain higher interest rates longer than its U.S. and euro zone counterparts. While the Fed and the European Central Bank might cut rates in September, the BoE is expected to hold firm, according to LSEG data. Domestically, Nationwide Building Society reported a 0.2% fall in house prices for August, though they were up 2.4% year-over-year.

(With inputs from agencies.)