FTSE 100's Resilient Rally: Mining and Defense Stocks Lead the Charge

The FTSE 100 recorded a strong weekly gain, driven by mining and defense stocks despite pressures from homebuilders. The Bank of England's rate cut and economic data on a weak economy set the scene. Precious metals and financial stocks led the gain, while concerns on inflation loom.

The UK's FTSE 100 index posted its strongest weekly gain in nearly two months, driven by robust performances in mining and defense sectors. This surge came despite the drag from homebuilders, amidst a week filled with significant economic indicators both in the UK and the U.S.

The index increased by 0.61% on Friday, culminating in a 2.6% weekly growth. This comes on the back of the Bank of England's 25-basis-point rate cut announcement. In contrast, the midcap FTSE 250 remained mostly unchanged after early gains. Precious metals and mining stocks saw significant advances with silver prices reaching new highs.

Despite the positive performance of the FTSE 100, concerns remain over inflation risks and fiscal challenges. Some financial stocks surged due to higher rates and undervaluation, but the homebuilders' sector suffered declines. Mid-sized lenders OneSavings Bank and Metro Bank saw gains due to their reclassification under the BoE's MREL regime.

(With inputs from agencies.)