London Stocks Surge on BoE Rate Cut and US Inflation Easing

London stocks climbed, driven by the Bank of England's rate cut and positive US inflation data that hinted at further Federal Reserve easing. The FTSE 100 and midcap FTSE 250 witnessed gains, while aerospace, defence, and retail stocks soared. The FTSE 100 might see its best year since 2009.

London stocks soared on Thursday as the Bank of England's anticipated interest rate cut and unexpectedly low U.S. inflation figures fueled hopes for further Federal Reserve easing. The FTSE 100 surged 0.65%, reaching its highest point in over a month, while the midcap FTSE 250 climbed 0.76%.

The pan-European benchmark index saw a 0.9% rise as the European Central Bank maintained rates while adjusting growth and inflation forecasts upward. BoE's 25 basis point rate cut to 3.75% had a mixed market response, with sterling firming and gilt yields increasing, reflecting uncertainty over the pace of future borrowing cost reductions.

Investor sentiment was buoyed by notable performances in aerospace and defence stocks, boosting the sector by 1.8%. Rolls-Royce experienced a 3.8% jump, and Melrose Industries and Babcock International Group saw increases of 2.6% and 1.4%, respectively. Additionally, the FTSE 100 is on track for its best year since 2009, despite ongoing concerns regarding the domestic economy.

(With inputs from agencies.)