Mining Stocks Boost London's FTSE Amid Interest Rate Speculations

Mining stocks boosted London's blue-chip index as investors speculated on a significant U.S. interest rate cut. The FTSE 100 rose, driven by gains in precious and industrial metals amid a weakening dollar. Meanwhile, the Bank of England's upcoming policy meeting and Vodafone's merger plans were highly anticipated.

Mining stocks lifted London's blue-chip index on Friday, driven by investor bets on a substantial U.S. interest rate cut next week. However, a stronger pound limited gains for export-focused companies.

The FTSE 100 saw a 0.2% rise, while the mid-cap FTSE 250 jumped 0.4%, eyeing its first weekly gain in three. Precious metal miners, including Fresnillo, Endeavour, and Centamin, advanced roughly 2% each as gold prices hit a record against a weaker dollar.

Industrial metal miners gained 0.9%, spurred by a two-week high in copper prices on expectations of fiscal support from China. Sterling touched a one-week high against the dollar after reports from the Wall Street Journal and Financial Times suggested a close call on whether the U.S. Fed will cut rates by 25 or 50 basis points next Wednesday.

This speculation pushed traders to increase their expectations of a steeper 50 bps rate cut to 43% from 14% a day earlier, according to CME's FedWatch tool. Former New York Fed President Bill Dudley also indicated a strong case for a 50 bps cut.

Investors are also preparing for the Bank of England's policy meeting next week, which is expected to maintain the current rate, as projected by all 65 economists in a Reuters poll. The BoE meeting will be scrutinized for future policy clues and decisions on bond sales pace, a hot political issue. Last month, the BoE lowered rates by 25 bps to 5% from a 16-year high.

In other news, Vodafone's $19 billion merger with Three UK could increase mobile bills for millions, according to Britain's competition regulator. Vodafone shares rose 0.2%, while Flutter Entertainment saw a slight decline after announcing plans to acquire a 56% stake in NSX Group for around $350 million.

(With inputs from agencies.)