FTSE 100 to end September quarter on a high after bright GDP data

UK's FTSE 100 was set to end the September quarter on a high note on Friday after data showed Britain's economy fared better since the start of the pandemic than previously thought.

UK's FTSE 100 was set to end the September quarter on a high note on Friday after data showed Britain's economy fared better since the start of the pandemic than previously thought. The blue-chip FTSE 100 rose 0.7% by 0837 GMT and is seen ending 1.7% higher in the September quarter, rebounding from a 1.3% fall in the previous quarter.

However, the benchmark index is on track for a second consecutive weekly decline. Britain's second-quarter GDP of 2023 was 1.8% larger than in the final three months of 2019, the last full quarter before the start of the COVID-19 pandemic and the growth was faster than that of Germany or France.

Domestic GDP in the second quarter was confirmed at 0.2% higher than the previous quarter in line with the economists' forecasts polled by Reuters, as the Office of National Statistics released revisions to official data. The sterling rose 0.3% against the U.S. dollar after the data.

"UK economy is actually holding up much better and the consumer is more resilient and I think that could potentially mean another rate hike by the end of the year and then higher-for-longer rates," said Anthi Tsouvali, multi-asset strategist at State Street Global Markets. Traders are betting a 36% chance for the Bank of England to raise interest rates to 5.50% by year-end after the central bank unexpectedly held rates steady last week.

Consumer staples and discretionary stocks rose with personal goods and homebuilders climbing over 2% each, while retailers rose more than 1%. The mid-cap FTSE 250 index leaped 1.3%, boosted by a 10.9% jump in the shares of Aston Martin after the luxury carmaker said Chairman Lawrence Stroll's Yew Tree Consortium further raised its stake in the firm by 3.27% to 26.23%. Severn Trent shares rose 2.1% after the British water supplier said it would raise 1 billion pounds ($1.2 billion) in new equity.

Elsewhere, British lenders approved the fewest mortgages in six months in August, data showed.