Commodity stocks lead FTSE 100 higher; ex-dividend trade caps gains

The UK's FTSE 100 index rose on Thursday boosted by commodity shares, although gains were limited by a number of stocks trading ex-dividend and fears that rapid policy tightening by the Bank of England to tame inflation will trigger a recession. The FTSE 100 ended 0.4% higher, with Chilean miner Antofagasta rising 2.6% to top the index as copper prices gained on hopes for solid demand in China.

The UK's FTSE 100 index rose on Thursday boosted by commodity shares, although gains were limited by a number of stocks trading ex-dividend and fears that rapid policy tightening by the Bank of England to tame inflation will trigger a recession.

The FTSE 100 ended 0.4% higher, with Chilean miner Antofagasta rising 2.6% to top the index as copper prices gained on hopes for solid demand in China. Oil majors BP and Shell added 2.6% and 1.6%, respectively, tracking crude prices higher on robust U.S. crude stocks data.

The FTSE 250 midcap index closed 0.6% higher, lifted by a 5.8% rise in shares of Plus500 Plc, a day after the online trading platform posted a higher half-year profit. The index had logged its worst one-day performance since June 30 in the previous session after data showed Britain's annual consumer price inflation jumped to a higher-than-expected 10.1% in July, fuelling bets of another big rate hike by the BoE next month.

"The Bank of England (BoE) remains painted into a corner, forced to become increasingly hawkish because of high inflation and a tight labour market, even as the economy rapidly slows," BCA analyst wrote in a note. "A recession is now unavoidable given the magnitude of the inflation shock, which is leading to a toxic mix of tightening monetary policy and contracting real incomes."

Rising worries about a cost-of-living crisis have rattled markets this year, with the domestically-focused FTSE 250 index down 14.2% compared with a 2.1% rise in FTSE 100 which is more skewed towards global firms and defensive companies. Meanwhile, Liz Truss, the front-runner to become Britain's next prime minister, wants to examine the roles of the country's three financial regulators as part of a review, a source close to her leadership campaign said on Thursday.

Among other stocks, AO World jumped 5% after the online electricals retailer reported full-year underlying earnings that topped analysts' estimates. A handful of shares trading ex-dividend weighed on the blue-chip index, with miner Anglo American, lender HSBC and insurer Legal & General falling between 0.8% and 4.1%.