British shares end higher as UK economy stages strong rebound

British pound coins are seen in front of displayed stock graph in this illustration taken, November 9, 2021. REUTERS/Dado Ruvic/Illustration
  • UK economy grows 0.8% in January
  • Blue-chip index has biggest weekly gain since Dec
  • Pearson jumps on rejecting takeover approach
  • FTSE 100 up 0.7%, FTSE 250 adds 1.3%

March 11 (Reuters) - Britain's FTSE 100 ended higher on Friday and marked its biggest weekly gain in three months with financial stocks and industrial miners leading gains, while data showing an improving UK economy bolstered the case for a Bank of England rate hike next week.

The blue-chip FTSE 100 index (.FTSE) gained0.8% and ended the week 2.3% higher, with support from gains in energy stocks (.FTNMX601010), travel shares (.FTNMX405010) and banks (.FTNMX301010). It had declined for the previous three weeks.

Data showed that gross domestic product (GDP) grew by 0.8% in month-on-month terms in January after a 0.2% decline in December. That was the strongest monthly expansion since June and more than forecast by any economist in a Reuters poll, which had pointed to growth of 0.2%. read more

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"GDP figures could make it easier for the central bank to hike rates, but I think they're looking beyond this and will be focused on what the effects of this Ukraine situation are, and I don't believe that to be very bullish," said Keith Temperton, a sales trader at Forte Securities.

Despite the week's rebound, the FTSE 100 has lost 3.1% so far this year. Still, heavyweight energy firms tracked strong gains in oil prices since Russia's invasion of Ukraine, so year-to-date losses were not as steep as those in the wider European aggregate (.STOXX).

However, the economic pressure from rising energy costs has raised inflation and economical growth worries in UK and across the globe.

"With energy prices maintaining sort of extended high levels, it's going to be a major headwind for the economy, not just for UK but for global as well," added Temperton.

Meanwhile, markets drew some support from positive statements from Russian President Vladimir Putin on some progress in Moscow's talks with Ukraine. read more

The midcap index (.FTMC) ended 1.3% higher and recorded its best week since November 2020.

Among individual stocks, Berkeley rose 2.3% after the housebuilder joined bigger rivals in highlighting persistent strong demand in an under-supplied housing market. read more

Pearson surged 18% to the top of the FTSE 100 after it rejected two takeover approaches from investment firm Apollo (APO.N), saying its latest $8.5 billion possible cash offer undervalued the global education group. read more

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Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila and David Gregorio

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