Mining Stocks Propel FTSE as Investors Bet on U.S. Rate Cut

Mining stocks boosted the FTSE 100 due to investor expectations of a substantial U.S. interest rate cut. Gains were moderated by the strong pound. Precious metal and industrial miners rose, with gold hitting a record high. Sterling climbed, traders expected a steeper U.S. rate cut, and Vodafone's merger with Three UK received scrutiny.

Mining stocks propelled London's blue-chip FTSE 100 index on Friday as investor expectations of a hefty U.S. interest rate cut next week rose. Despite this, the strong pound limited gains for export-oriented companies.

The FTSE 100 gained 0.2%, while the mid-cap FTSE 250 firmed 0.4%, marking its first weekly gain in three weeks. Precious metal miners Fresnillo, Endeavour, and Centamin each gained about 2%, with gold reaching a record high against a weakening U.S. dollar.

Industrial metal miners saw a 0.9% increase as copper prices hit a two-week high on hopes of fiscal support in China. Sterling surged to a one-week high against the dollar after reports suggested a close Federal Reserve decision on whether to cut rates by 25 or 50 basis points next Wednesday.

This led traders to amplify their expectations for a steeper 50 bps rate cut from 14% to 43%, bolstered by remarks from influential former New York Fed President Bill Dudley, who stated there was a "strong case for 50".

Investors also anticipated the Bank of England's policy meeting next week, with expectations of holding the current rate steady. However, the meeting will be closely examined for clues regarding future rate adjustments and the pace of bond sales, a politically sensitive issue. Last month, the BoE cut rates by 25 bps to 5%, down from a 16-year high.

In other market movements, Vodafone shares rose 0.2% despite concerns from Britain's competition regulator that its $19 billion merger with Three UK could hike customer bills. Meanwhile, Flutter Entertainment saw a decline as the Irish betting company announced plans to acquire a 56% stake in NSX Group, the operator of Brazilian gaming group Betnacional, for around $350 million.

(With inputs from agencies.)