UK's FTSE 100 rises as banks gain on relaxed capital rules

Last week Reeves' long-awaited budget soothed some concerns about Britain's long-term finances, fuelling a rally in UK shares, bonds and the pound. Investors in the global markets are awaiting the decision from the U.S. Federal Reserve on interest rates next week, with markets expecting a 25-basis-point rate cut.

UK's FTSE 100 inched higher on Tuesday, lifted by financial stocks after the Bank of England eased capital requirements for lenders in a bid to boost growth, while industrial shares rebounded after suffering a sharp drop in the previous session.

The blue-chip FTSE 100 rose 0.4% by 1119 GMT, while midcap FTSE 250 was flat, reversing course after it had the biggest single-day percentage drop in two weeks on Monday. Shares of Lloyds Banking Group gained 1.6%, the most among banks, while HSBC Holdings, Barclays, and Standard Chartered added between 0.9% and 1.3%.

The broader banks index climbed 1.2% as Britain's central bank cut the amount of capital it estimates lenders need to hold for the first time since the global financial crisis after the lenders passed its stress test. Chemicals stocks were also in a bright spot, up 1%, with Victrex jumping 7%, after the thermoplastic polymer maker announced higher full-year sales.

Britain's economy will grow faster than previously expected next year, the OECD said on Tuesday, citing the impact of Finance Minister Rachel Reeves' budget on consumption and drag from global uncertainty that could keep pressure on inflation. Last week Reeves' long-awaited budget soothed some concerns about Britain's long-term finances, fuelling a rally in UK shares, bonds and the pound.

Investors in the global markets are awaiting the decision from the U.S. Federal Reserve on interest rates next week, with markets expecting a 25-basis-point rate cut. The Bank of England is expected to deliver a similar sized move later in the month.

On the flip side, precious metal miners slid 1.6% after gold prices fell, while industrial metal miners dipped 0.2% as copper came off a record high.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)